Can you try adding this to your Terminal settings block?:

    "working_directory": "always_home"

See: https://zed.dev/docs/configuring-zed#working-directory

Can you try adding this to your Terminal settings block?:

    "working_directory": "always_home"

See: zed.dev/docs/configuring-zed#working-directory

Why is my $HOME always for /

happens to me too, it isn't clear what does it mean "home, if we can find it", how is home being retrieved?

I ran into this too, and I think I've tracked it down. The working_directory setting goes through some processing, and then eventually gets passed through to the alacritty_terminal crate to actually handle the terminal.

I don't see specific documentation around this functionality, but this comment on an unrelated alacritty issue suggests that the default is the directory of the foreground process. If zed is run from /Applications the running directory would be /, so that explains why terminals open at root.

Zed's various working_directory options all fall back to the default (None). I think the solution is for Zed to attempt to replace the default with the user's home directory (while still falling back to None), rather than rely on alacritty to do that if the default is passed in. If Alacritty ever changes their default, it will disrupt Zed functionality as well.

I have an idea how to fix it; I'll put a PR up sometime tonight.