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There is no alternative really. Cursor was the market leader in LLM-assisted IDE experience before SpaceX acquisition, though Elon nerfed the product a lot in recent months. And there is still no good alternative to it. Google tries to compete via Antigravity, but that also uses OpenVSX. I myself use Cursor and use Claude there installed via OpenVSX, and was not affected only thanks to my laziness (I saw upgrade button, but became distracted and did not click). I hope this situation will become a trigger to improve OpenVSX security.
Why not use claude code directly?

Why risk getting compromised like that?

Well for me, as developer on a modern stack, there is always some risk involved. If not from agentic tools, then the package registries are compromised left and right, so it all comes down to mitigating the risk. I use Claude, Codex and Cursor/SpaceX agents, and Cursor comes very convenient to have all three in a single interface. Also I still code manually especially when prototyping, so having an IDE helps with it as well. I knew about OpenVSX situation with the search, so when installing extensions I always did triple-checking to verify the extension being really submitted by upstream and not by squatter; but now given upgrades can also deliver a compromise I am thinking of developing an extension that will act in similar manner to pnpm minimum release age.
To anyone who might be reading this exchange, actually there is recently added builtin setting for delayed auto-update, `extensions.autoUpdateDelay`, see https://github.com/microsoft/vscode/issues/316867 and https://github.com/microsoft/vscode/pull/321039