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Implement exponential backoff when the extension is being rate limited #8333

@kilo-code-bot

Description

@kilo-code-bot

When the extension encounters rate limiting (e.g., HTTP 429 responses), it should implement an exponential backoff retry strategy instead of immediately failing or retrying at a fixed interval. This would improve the user experience during periods of high load and reduce unnecessary requests to upstream providers.

Expected behavior

  • When a rate limit response (429) is received, the extension should automatically retry with exponential backoff
  • Backoff intervals should increase exponentially (e.g., 1s, 2s, 4s, 8s, etc.) up to a reasonable maximum
  • Users should be informed that a retry is in progress
  • After a maximum number of retries, gracefully inform the user

Current behavior

The extension does not implement exponential backoff when rate limited, leading to a poor user experience during throttling.

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