diff --git a/.gitignore b/.gitignore
index e615ec464617..d453ee2e969f 100644
--- a/.gitignore
+++ b/.gitignore
@@ -22,3 +22,4 @@ test/test-results
 
 # Quilt's internal data.
 /.pc
+/patches/*.diff~
diff --git a/docs/CONTRIBUTING.md b/docs/CONTRIBUTING.md
index 205311558019..eaa4b736a770 100644
--- a/docs/CONTRIBUTING.md
+++ b/docs/CONTRIBUTING.md
@@ -96,10 +96,10 @@ re-apply the patches.
 ### Version updates to Code
 
 1. Update the `lib/vscode` submodule to the desired upstream version branch.
-2. From the code-server **project root**, run `yarn install`.
-3. Apply the patches (`quilt push -a`) or restore your stashed changes. At this
+2. Apply the patches (`quilt push -a`) or restore your stashed changes. At this
    stage you may need to resolve conflicts. For example use `quilt push -f`,
    manually apply the rejected portions, then `quilt refresh`.
+3. From the code-server **project root**, run `yarn install`.
 4. Test code-server locally to make sure everything works.
 5. Check the Node.js version that's used by Electron (which is shipped with VS
    Code. If necessary, update your version of Node.js to match.
diff --git a/lib/vscode b/lib/vscode
index f80445acd5a3..c722ca6c7eed 160000
--- a/lib/vscode
+++ b/lib/vscode
@@ -1 +1 @@
-Subproject commit f80445acd5a3dadef24aa209168452a3d97cc326
+Subproject commit c722ca6c7eed3d7987c0d5c3df5c45f6b15e77d1
diff --git a/patches/base-path.diff b/patches/base-path.diff
index 715f8a2150a9..eb3008eb2251 100644
--- a/patches/base-path.diff
+++ b/patches/base-path.diff
@@ -185,10 +185,10 @@ Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
  				settingsSyncOptions: !this._environmentService.isBuilt && this._environmentService.args['enable-sync'] ? { enabled: true } : undefined,
  				productConfiguration: <Partial<IProductConfiguration>>{
 +					rootEndpoint: base,
+ 					embedderIdentifier: 'server-distro',
  					extensionsGallery: this._webExtensionResourceUrlTemplate ? {
  						...this._productService.extensionsGallery,
- 						'resourceUrlTemplate': this._webExtensionResourceUrlTemplate.with({
-@@ -289,7 +295,9 @@ export class WebClientServer {
+@@ -290,7 +296,9 @@ export class WebClientServer {
  					} : undefined
  				}
  			})))
@@ -199,7 +199,7 @@ Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
  
  		const cspDirectives = [
  			'default-src \'self\';',
-@@ -368,3 +376,70 @@ export class WebClientServer {
+@@ -369,3 +377,70 @@ export class WebClientServer {
  		return res.end(data);
  	}
  }
@@ -286,7 +286,7 @@ Index: code-server/lib/vscode/src/vs/code/browser/workbench/workbench.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/code/browser/workbench/workbench.ts
 +++ code-server/lib/vscode/src/vs/code/browser/workbench/workbench.ts
-@@ -504,6 +504,7 @@ function doCreateUri(path: string, query
+@@ -482,6 +482,7 @@ function doCreateUri(path: string, query
  		});
  	}
  
@@ -294,11 +294,11 @@ Index: code-server/lib/vscode/src/vs/code/browser/workbench/workbench.ts
  	return URI.parse(window.location.href).with({ path, query });
  }
  
-@@ -515,7 +516,7 @@ function doCreateUri(path: string, query
+@@ -493,7 +494,7 @@ function doCreateUri(path: string, query
  	if (!configElement || !configElementAttribute) {
  		throw new Error('Missing web configuration element');
  	}
--	const config: IWorkbenchConstructionOptions & { folderUri?: UriComponents, workspaceUri?: UriComponents } = JSON.parse(configElementAttribute);
+-	const config: IWorkbenchConstructionOptions & { folderUri?: UriComponents; workspaceUri?: UriComponents } = JSON.parse(configElementAttribute);
 +	const config: IWorkbenchConstructionOptions & { folderUri?: UriComponents, workspaceUri?: UriComponents } = { ...JSON.parse(configElementAttribute), remoteAuthority: location.host }
  
  	// Create workbench
diff --git a/patches/display-language.diff b/patches/display-language.diff
index bbcaa67310fd..999c29b13d68 100644
--- a/patches/display-language.diff
+++ b/patches/display-language.diff
@@ -6,7 +6,7 @@ Index: code-server/lib/vscode/src/vs/server/node/serverServices.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/server/node/serverServices.ts
 +++ code-server/lib/vscode/src/vs/server/node/serverServices.ts
-@@ -198,6 +198,9 @@ export async function setupServerService
+@@ -188,6 +188,9 @@ export async function setupServerService
  		const channel = new ExtensionManagementChannel(extensionManagementService, (ctx: RemoteAgentConnectionContext) => getUriTransformer(ctx.remoteAuthority));
  		socketServer.registerChannel('extensions', channel);
  
@@ -20,7 +20,7 @@ Index: code-server/lib/vscode/src/vs/base/common/platform.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/base/common/platform.ts
 +++ code-server/lib/vscode/src/vs/base/common/platform.ts
-@@ -83,6 +83,17 @@ if (typeof navigator === 'object' && !is
+@@ -84,6 +84,17 @@ if (typeof navigator === 'object' && !is
  	_isWeb = true;
  	_locale = navigator.language;
  	_language = _locale;
@@ -185,7 +185,7 @@ Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
  		const data = (await util.promisify(fs.readFile)(filePath)).toString()
  			.replace('{{WORKBENCH_WEB_CONFIGURATION}}', escapeAttribute(JSON.stringify({
  				remoteAuthority,
-@@ -301,7 +304,8 @@ export class WebClientServer {
+@@ -302,7 +305,8 @@ export class WebClientServer {
  			})))
  			.replace('{{WORKBENCH_AUTH_SESSION}}', () => authSessionInfo ? escapeAttribute(JSON.stringify(authSessionInfo)) : '')
  			.replace(/{{BASE}}/g, base)
@@ -252,7 +252,7 @@ Index: code-server/lib/vscode/src/vs/workbench/workbench.web.main.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/workbench/workbench.web.main.ts
 +++ code-server/lib/vscode/src/vs/workbench/workbench.web.main.ts
-@@ -109,6 +109,10 @@ registerSingleton(ICustomEndpointTelemet
+@@ -111,6 +111,10 @@ registerSingleton(IDiagnosticsService, N
  
  //#region --- workbench contributions
  
diff --git a/patches/integration.diff b/patches/integration.diff
index 6f629c2e2c84..1be03618d532 100644
--- a/patches/integration.diff
+++ b/patches/integration.diff
@@ -174,10 +174,10 @@ Index: code-server/lib/vscode/src/vs/workbench/browser/web.main.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/workbench/browser/web.main.ts
 +++ code-server/lib/vscode/src/vs/workbench/browser/web.main.ts
-@@ -69,6 +69,7 @@ import { ICredentialsService } from 'vs/
- import { IndexedDB } from 'vs/base/browser/indexedDB';
+@@ -69,6 +69,7 @@ import { IndexedDB } from 'vs/base/brows
  import { BrowserCredentialsService } from 'vs/workbench/services/credentials/browser/credentialsService';
  import { IWorkspace } from 'vs/workbench/services/host/browser/browserHostService';
+ import { WebFileSystemAccess } from 'vs/platform/files/browser/webFileSystemAccess';
 +import { CodeServerClient } from 'vs/workbench/browser/client';
  
  export class BrowserMain extends Disposable {
diff --git a/patches/last-opened.diff b/patches/last-opened.diff
index 83fafe291f89..71a1c9980db1 100644
--- a/patches/last-opened.diff
+++ b/patches/last-opened.diff
@@ -6,27 +6,3 @@ respect it here then remove our own redirction code that handles this.
 
 Our version might be better anyway since it puts the workspace in the URL.
 
-Index: code-server/lib/vscode/src/vs/code/browser/workbench/workbench.ts
-===================================================================
---- code-server.orig/lib/vscode/src/vs/code/browser/workbench/workbench.ts
-+++ code-server/lib/vscode/src/vs/code/browser/workbench/workbench.ts
-@@ -410,19 +410,6 @@ class WorkspaceProvider implements IWork
- 				workspace = { folderUri: URI.revive(config.folderUri) };
- 			} else if (config.workspaceUri) {
- 				workspace = { workspaceUri: URI.revive(config.workspaceUri) };
--			} else {
--				workspace = (() => {
--					const lastWorkspaceRaw = window.localStorage.getItem(WorkspaceProvider.LAST_WORKSPACE_STORAGE_KEY);
--					if (lastWorkspaceRaw) {
--						try {
--							return parse(lastWorkspaceRaw); // use marshalling#parse() to revive potential URIs
--						} catch (error) {
--							// Ignore
--						}
--					}
--
--					return undefined;
--				})();
- 			}
- 		}
- 
diff --git a/patches/local-storage.diff b/patches/local-storage.diff
index 8da6393cd41e..4c3c90da16ed 100644
--- a/patches/local-storage.diff
+++ b/patches/local-storage.diff
@@ -48,7 +48,7 @@ Index: code-server/lib/vscode/src/vs/workbench/services/environment/browser/envi
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/workbench/services/environment/browser/environmentService.ts
 +++ code-server/lib/vscode/src/vs/workbench/services/environment/browser/environmentService.ts
-@@ -126,7 +126,14 @@ export class BrowserWorkbenchEnvironment
+@@ -52,7 +52,14 @@ export class BrowserWorkbenchEnvironment
  	get logFile(): URI { return joinPath(this.logsHome, 'window.log'); }
  
  	@memoize
diff --git a/patches/logout.diff b/patches/logout.diff
index 94c03086ebad..7bbf73ef8c65 100644
--- a/patches/logout.diff
+++ b/patches/logout.diff
@@ -45,9 +45,9 @@ Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
  					rootEndpoint: base,
  					updateEndpoint: !this._environmentService.args['disable-update-check'] ? base + '/update/check' : undefined,
 +					logoutEndpoint: this._environmentService.args['auth'] ? base + '/logout' : undefined,
+ 					embedderIdentifier: 'server-distro',
  					extensionsGallery: {
  						...this._productService.extensionsGallery,
- 						'resourceUrlTemplate': this._webExtensionResourceUrlTemplate ? this._webExtensionResourceUrlTemplate.with({
 Index: code-server/lib/vscode/src/vs/workbench/browser/client.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/workbench/browser/client.ts
diff --git a/patches/marketplace.diff b/patches/marketplace.diff
index 024c4bbb56af..17442fc1fc65 100644
--- a/patches/marketplace.diff
+++ b/patches/marketplace.diff
@@ -32,10 +32,10 @@ Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/server/node/webClientServer.ts
 +++ code-server/lib/vscode/src/vs/server/node/webClientServer.ts
-@@ -285,14 +285,14 @@ export class WebClientServer {
- 				settingsSyncOptions: !this._environmentService.isBuilt && this._environmentService.args['enable-sync'] ? { enabled: true } : undefined,
+@@ -286,14 +286,14 @@ export class WebClientServer {
  				productConfiguration: <Partial<IProductConfiguration>>{
  					rootEndpoint: base,
+ 					embedderIdentifier: 'server-distro',
 -					extensionsGallery: this._webExtensionResourceUrlTemplate ? {
 +					extensionsGallery: {
  						...this._productService.extensionsGallery,
diff --git a/patches/node-version.diff b/patches/node-version.diff
index a3e58f51e1d3..9ee48e87f4f1 100644
--- a/patches/node-version.diff
+++ b/patches/node-version.diff
@@ -11,7 +11,7 @@ Index: code-server/lib/vscode/build/gulpfile.reh.js
 ===================================================================
 --- code-server.orig/lib/vscode/build/gulpfile.reh.js
 +++ code-server/lib/vscode/build/gulpfile.reh.js
-@@ -122,9 +122,7 @@ const serverWithWebEntryPoints = [
+@@ -124,9 +124,7 @@ const serverWithWebEntryPoints = [
  ];
  
  function getNodeVersion() {
@@ -71,7 +71,7 @@ Index: code-server/lib/vscode/build/lib/util.ts
 ===================================================================
 --- code-server.orig/lib/vscode/build/lib/util.ts
 +++ code-server/lib/vscode/build/lib/util.ts
-@@ -371,9 +371,7 @@ export function streamToPromise(stream:
+@@ -371,9 +371,7 @@ export function streamToPromise(stream: 
  }
  
  export function getElectronVersion(): string {
@@ -91,10 +91,11 @@ Index: code-server/lib/vscode/remote/.yarnrc
 ===================================================================
 --- code-server.orig/lib/vscode/remote/.yarnrc
 +++ /dev/null
-@@ -1,3 +0,0 @@
+@@ -1,4 +0,0 @@
 -disturl "http://nodejs.org/dist"
 -target "14.16.0"
 -runtime "node"
+-build_from_source "true"
 Index: code-server/lib/vscode/.yarnrc
 ===================================================================
 --- code-server.orig/lib/vscode/.yarnrc
diff --git a/patches/proposed-api.diff b/patches/proposed-api.diff
index 015f43ba21ce..5971d714ec73 100644
--- a/patches/proposed-api.diff
+++ b/patches/proposed-api.diff
@@ -9,7 +9,7 @@ Index: code-server/lib/vscode/src/vs/workbench/services/extensions/common/abstra
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/workbench/services/extensions/common/abstractExtensionService.ts
 +++ code-server/lib/vscode/src/vs/workbench/services/extensions/common/abstractExtensionService.ts
-@@ -1134,7 +1134,7 @@ class ProposedApiController {
+@@ -1163,7 +1163,7 @@ class ProposedApiController {
  
  		this._envEnabledExtensions = new Set((_environmentService.extensionEnabledProposedApi ?? []).map(id => ExtensionIdentifier.toKey(id)));
  
@@ -22,7 +22,7 @@ Index: code-server/lib/vscode/src/vs/workbench/services/extensions/common/extens
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/workbench/services/extensions/common/extensions.ts
 +++ code-server/lib/vscode/src/vs/workbench/services/extensions/common/extensions.ts
-@@ -135,10 +135,7 @@ export interface IExtensionHost {
+@@ -134,10 +134,7 @@ export interface IExtensionHost {
  }
  
  export function isProposedApiEnabled(extension: IExtensionDescription, proposal: ApiProposalName): boolean {
diff --git a/patches/proxy-uri.diff b/patches/proxy-uri.diff
index 9a960a7993d1..b46d733d91f0 100644
--- a/patches/proxy-uri.diff
+++ b/patches/proxy-uri.diff
@@ -73,9 +73,9 @@ Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
  					updateEndpoint: !this._environmentService.args['disable-update-check'] ? base + '/update/check' : undefined,
  					logoutEndpoint: this._environmentService.args['auth'] ? base + '/logout' : undefined,
 +					proxyEndpointTemplate: base + '/proxy/{{port}}',
+ 					embedderIdentifier: 'server-distro',
  					extensionsGallery: {
  						...this._productService.extensionsGallery,
- 						'resourceUrlTemplate': this._webExtensionResourceUrlTemplate ? this._webExtensionResourceUrlTemplate.with({
 Index: code-server/lib/vscode/src/vs/workbench/browser/web.main.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/workbench/browser/web.main.ts
@@ -93,7 +93,7 @@ Index: code-server/lib/vscode/src/vs/workbench/contrib/terminal/common/terminalE
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/workbench/contrib/terminal/common/terminalEnvironment.ts
 +++ code-server/lib/vscode/src/vs/workbench/contrib/terminal/common/terminalEnvironment.ts
-@@ -388,7 +388,7 @@ export function createTerminalEnvironmen
+@@ -390,7 +390,7 @@ export function createTerminalEnvironmen
  
  		// Sanitize the environment, removing any undesirable VS Code and Electron environment
  		// variables
diff --git a/patches/series b/patches/series
index d812592b1c2b..87e8f3948a90 100644
--- a/patches/series
+++ b/patches/series
@@ -16,6 +16,5 @@ post-install.diff
 log-level.diff
 local-storage.diff
 service-worker.diff
-last-opened.diff
 connection-type.diff
 sourcemaps.diff
diff --git a/patches/service-worker.diff b/patches/service-worker.diff
index 200555538baf..18cdc6c90ec8 100644
--- a/patches/service-worker.diff
+++ b/patches/service-worker.diff
@@ -21,10 +21,10 @@ Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/server/node/webClientServer.ts
 +++ code-server/lib/vscode/src/vs/server/node/webClientServer.ts
-@@ -296,6 +296,10 @@ export class WebClientServer {
- 					updateEndpoint: !this._environmentService.args['disable-update-check'] ? base + '/update/check' : undefined,
+@@ -297,6 +297,10 @@ export class WebClientServer {
  					logoutEndpoint: this._environmentService.args['auth'] ? base + '/logout' : undefined,
  					proxyEndpointTemplate: base + '/proxy/{{port}}',
+ 					embedderIdentifier: 'server-distro',
 +					serviceWorker: {
 +						scope: vscodeBase + '/',
 +						path: base + '/_static/out/browser/serviceWorker.js',
diff --git a/patches/sourcemaps.diff b/patches/sourcemaps.diff
index fe0e260748e3..cb2367e6a0f3 100644
--- a/patches/sourcemaps.diff
+++ b/patches/sourcemaps.diff
@@ -10,7 +10,7 @@ Index: code-server/lib/vscode/build/gulpfile.reh.js
 ===================================================================
 --- code-server.orig/lib/vscode/build/gulpfile.reh.js
 +++ code-server/lib/vscode/build/gulpfile.reh.js
-@@ -195,8 +195,7 @@ function packageTask(type, platform, arc
+@@ -197,8 +197,7 @@ function packageTask(type, platform, arc
  
  		const src = gulp.src(sourceFolderName + '/**', { base: '.' })
  			.pipe(rename(function (path) { path.dirname = path.dirname.replace(new RegExp('^' + sourceFolderName), 'out'); }))
@@ -20,7 +20,7 @@ Index: code-server/lib/vscode/build/gulpfile.reh.js
  
  		const workspaceExtensionPoints = ['debuggers', 'jsonValidation'];
  		const isUIExtension = (manifest) => {
-@@ -235,9 +234,9 @@ function packageTask(type, platform, arc
+@@ -237,9 +236,9 @@ function packageTask(type, platform, arc
  			.map(name => `.build/extensions/${name}/**`);
  
  		const extensions = gulp.src(extensionPaths, { base: '.build', dot: true });
@@ -32,7 +32,7 @@ Index: code-server/lib/vscode/build/gulpfile.reh.js
  
  		let version = packageJson.version;
  		const quality = product.quality;
-@@ -363,7 +362,7 @@ function packageTask(type, platform, arc
+@@ -374,7 +373,7 @@ function tweakProductForServerWeb(produc
  	const minifyTask = task.define(`minify-vscode-${type}`, task.series(
  		optimizeTask,
  		util.rimraf(`out-vscode-${type}-min`),
diff --git a/patches/unique-db.diff b/patches/unique-db.diff
index 5ea2fac3839d..ca3cc1aff996 100644
--- a/patches/unique-db.diff
+++ b/patches/unique-db.diff
@@ -21,7 +21,7 @@ Index: code-server/lib/vscode/src/vs/platform/storage/browser/storageService.ts
 @@ -13,6 +13,7 @@ import { InMemoryStorageDatabase, isStor
  import { ILogService } from 'vs/platform/log/common/log';
  import { AbstractStorageService, IS_NEW_KEY, StorageScope, StorageTarget } from 'vs/platform/storage/common/storage';
- import { IWorkspaceInitializationPayload } from 'vs/platform/workspaces/common/workspaces';
+ import { IAnyWorkspaceIdentifier } from 'vs/platform/workspace/common/workspace';
 +import { hash } from 'vs/base/common/hash';
  
  export class BrowserStorageService extends AbstractStorageService {
diff --git a/patches/update-check.diff b/patches/update-check.diff
index f9720da6c29e..ccfd39d1b875 100644
--- a/patches/update-check.diff
+++ b/patches/update-check.diff
@@ -105,9 +105,9 @@ Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
  				productConfiguration: <Partial<IProductConfiguration>>{
  					rootEndpoint: base,
 +					updateEndpoint: !this._environmentService.args['disable-update-check'] ? base + '/update/check' : undefined,
+ 					embedderIdentifier: 'server-distro',
  					extensionsGallery: {
  						...this._productService.extensionsGallery,
- 						'resourceUrlTemplate': this._webExtensionResourceUrlTemplate ? this._webExtensionResourceUrlTemplate.with({
 Index: code-server/lib/vscode/src/vs/server/node/serverEnvironmentService.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/server/node/serverEnvironmentService.ts
diff --git a/patches/webview.diff b/patches/webview.diff
index c104034bf8bb..a46901141762 100644
--- a/patches/webview.diff
+++ b/patches/webview.diff
@@ -10,7 +10,7 @@ Index: code-server/lib/vscode/src/vs/workbench/services/environment/browser/envi
 ===================================================================
 --- code-server.orig/lib/vscode/src/vs/workbench/services/environment/browser/environmentService.ts
 +++ code-server/lib/vscode/src/vs/workbench/services/environment/browser/environmentService.ts
-@@ -240,7 +240,7 @@ export class BrowserWorkbenchEnvironment
+@@ -176,7 +176,7 @@ export class BrowserWorkbenchEnvironment
  
  	@memoize
  	get webviewExternalEndpoint(): string {
@@ -31,11 +31,11 @@ Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
  				_wrapWebWorkerExtHostInIframe,
  				developmentOptions: { enableSmokeTestDriver: this._environmentService.driverHandle === 'web' ? true : undefined },
  				settingsSyncOptions: !this._environmentService.isBuilt && this._environmentService.args['enable-sync'] ? { enabled: true } : undefined,
-Index: code-server/lib/vscode/src/vs/workbench/api/common/shared/webview.ts
+Index: code-server/lib/vscode/src/vs/workbench/common/webview.ts
 ===================================================================
---- code-server.orig/lib/vscode/src/vs/workbench/api/common/shared/webview.ts
-+++ code-server/lib/vscode/src/vs/workbench/api/common/shared/webview.ts
-@@ -25,7 +25,7 @@ export const webviewResourceBaseHost = '
+--- code-server.orig/lib/vscode/src/vs/workbench/common/webview.ts
++++ code-server/lib/vscode/src/vs/workbench/common/webview.ts
+@@ -24,7 +24,7 @@ export const webviewResourceBaseHost = '
  
  export const webviewRootResourceAuthority = `vscode-resource.${webviewResourceBaseHost}`;