Learn more about designing ideal favicon and website logo. https://www.dozro.com/website

Some websites use a transparent favicon such as Squarespace, Quora and Trustpilot.

However, I recommend that you should not design transparent favicon because it reduces contrast with browser toolbar background especially when user selects some different browser theme.
Please watch video for examples of favicon on websites of Wikipedia, Facebook, Cigna, Lenovo, DuckDuckGo, Vimeo, Google Search, Verizon, Canva, Toyota, and others.