diff --git a/README.md b/README.md
index 2939936..ffb372d 100644
--- a/README.md
+++ b/README.md
@@ -25,8 +25,28 @@ catalog (a pure, key-free SDK call) in a notification and the
 3. Press **F5** (or Run → "Run Extension") to launch the Extension Development Host.
 4. In the new window: **Cmd/Ctrl+Shift+P** → **"Cowriting: Show Cline SDK Info"**.
 
+## F2 — Region-anchored threads (Feature #4)
+
+Attach durable, region-anchored discussion threads to any document. Threads
+render in the native VS Code **Comments** gutter and persist as git-native
+sidecars under `.threads/<doc-path>.json` (plain, diffable JSON — no server).
+
+- **Create:** select text → run **"Cowriting: Add Coauthoring Thread on Selection"**
+  (or the Comments gutter "+").
+- **Reply / Resolve:** use the native Comments reply box and the thread's
+  Resolve/Reopen actions.
+- **Survives edits, reload, and external change (`git pull`):** a hybrid anchor
+  (durable content fingerprint + live offset tracking) re-resolves the thread.
+  If the anchored text can't be confidently re-found, the thread is shown as
+  **orphaned** at its last-known line — never silently moved.
+
+Design: `vscode-cowriting-plugin-content/specs/coauthoring-inner-loop.md`. No live
+`@cline/sdk` turn and no credentials are involved in F2.
+
 ## Develop
 
 - `npm run watch` — rebuild on change.
-- `npm test` — run the unit test for the SDK driver.
+- `npm test` — vitest unit suite (SDK driver, schema, store, anchorer, thread mutations).
+- `npm run test:e2e` — `@vscode/test-electron` host E2E
+  (create → reply → resolve → persist → reload → re-anchor → orphan).
 - `npm run typecheck` — type-check without emit.