I initially noticed this issue while using Ghostty. There's some information in this discussion: ghostty-org/ghostty#6939

I was using Ghostty's catppuccin-mocha theme that's pulled from here. And while using neovim, I noticed that it had an unreadable block cursor due to very close colors.

Here's a picture from Ghostty, with the catppuccin-mocha theme:

And here's a picture from Alacritty with the catppuccin-mocha theme that comes from the catppuccin repo and not here:

As you can see, cursor is readable in Alacritty but it's not in Ghostty.

I've looked into what colors we use in here and in Alacritty.

In this repo, these are the cursor colors used:

cursor-color = #f5e0dc
cursor-text = #cdd6f4

And in the catppuccin/alacritty repo, these are the cursor colors used:

[colors.cursor]
text = "#1e1e2e"
cursor = "#f5e0dc"

They look very different. The hex colors in this repo are very close to each other and they fail the accessibility color contrast checker. I think there was an error.

After I added the colors mentioned in Alacritty one to my Ghostty config, I have a readable cursor:

cursor-color = #f5e0dc
cursor-text = #1e1e2e

Also I only mentioned the catppuccin-mocha theme, but I believe this might be a broader issue. In that Ghostty discussion, original poster mentioned that they had an issue with "ayu_light" as well. And it's not a Ghostty only issue. Searching for these colors shows that other terminals are broken as well.