diff --git a/Development-Setup.md b/Development-Setup.md
index 961c92b..832b6ae 100644
--- a/Development-Setup.md
+++ b/Development-Setup.md
@@ -2,50 +2,52 @@
 
 ## Prerequisites
 
-| Tool | Purpose |
-|---|---|
-| Rust (stable) | Backend |
-| Node.js + Bun | Frontend |
-| PostgreSQL | Database |
-| Docker + Docker Compose | Optional: run deps in containers |
+| Tool | Version | Purpose |
+|---|---|---|
+| Rust | stable 1.80+ | Backend |
+| Node.js + Bun | latest | Frontend |
+| PostgreSQL | 15+ | Database |
+| NATS | optional | Event transport (federation + notifications) |
+| Docker + Docker Compose | optional | Run deps in containers |
 
 ## Backend
 
 ```bash
-cd thoughts-backend
-
 # Copy and fill in env
 cp .env.example .env
 
-# Run migrations
-cargo run -p migration
+# Start the API server (runs migrations automatically on startup)
+cargo run -p bootstrap
 
-# Start the backend (tokio runtime)
-cargo run -p thoughts-backend
+# In a second terminal: start the event worker (optional)
+cargo run -p worker
 ```
 
-The backend starts on `http://localhost:3001` by default.
+The API server starts on `http://localhost:8000`.  
+Both processes read from the same `.env` file.
 
-### Environment Variables (`thoughts-backend/.env.example`)
+### Environment Variables (`.env.example`)
 
+```env
+DATABASE_URL=postgres://postgres:password@localhost:5432/thoughts
+JWT_SECRET=change-me
+BASE_URL=http://localhost:8000
+NATS_URL=nats://localhost:4222   # optional
 ```
-DATABASE_URL=postgres://user:pass@localhost:5432/thoughts
-JWT_SECRET=your-secret-here
-```
+
+`BASE_URL` is used to construct ActivityPub actor URLs and AP object IDs — must be the publicly reachable URL in production.
 
 ### Running Tests
 
 ```bash
-cd thoughts-backend
+# Unit tests — no database required
+cargo test -p application
 
-# All tests (requires running PostgreSQL)
-cargo test
-
-# API integration tests only
-cargo test -p thoughts-backend --test api
+# Full workspace (requires DATABASE_URL pointing to a running PostgreSQL)
+cargo test --workspace
 ```
 
-Tests spin up a test database; set `TEST_DATABASE_URL` in `.env` if it differs from `DATABASE_URL`.
+The `application` crate uses in-memory fakes from `domain`'s `test-helpers` feature for fast, isolated unit tests of all business logic.
 
 ---
 
@@ -54,39 +56,36 @@ Tests spin up a test database; set `TEST_DATABASE_URL` in `.env` if it differs f
 ```bash
 cd thoughts-frontend
 
-# Copy and fill in env
-cp .env.example .env.local
-
 # Install dependencies
 bun install
 
 # Start dev server
-bun dev
+bun run dev   # http://localhost:3000
 ```
 
-The frontend starts on `http://localhost:3000` and proxies `/api/*` to the backend.
-
 ### Environment Variables (`thoughts-frontend/.env.example`)
 
-```
-NEXT_PUBLIC_API_URL=http://localhost:3001
+```env
+NEXT_PUBLIC_API_URL=http://localhost:8000          # client-side requests
+NEXT_PUBLIC_SERVER_SIDE_API_URL=http://localhost:8000  # SSR requests
 ```
 
 ---
 
 ## Running Everything with Docker Compose
 
-For a fully isolated local environment:
-
 ```bash
-# Start all services (backend, frontend, postgres, nginx)
+# Start all services (api, worker, frontend, postgres, nats, nginx)
 docker compose up
 
-# Or just the database and let services run natively
+# Or just the database
 docker compose up database
+
+# Or database + NATS only
+docker compose up database nats
 ```
 
-The `compose.yml` at the repo root defines all services for local development.
+`compose.yml` at the repo root defines all services for local development.
 
 ---
 
@@ -94,20 +93,32 @@ The `compose.yml` at the repo root defines all services for local development.
 
 ```
 thoughts/
-├── compose.yml              # Dev Docker Compose
-├── compose.prod.yml         # Production Docker Compose
-├── nginx/                   # Nginx config
-├── thoughts-backend/        # Rust backend (workspace)
-│   ├── api/                 # HTTP layer
-│   ├── app/                 # Business logic
-│   ├── models/              # Domain types
-│   ├── common/              # Shared utilities
-│   ├── doc/                 # OpenAPI generation
-│   ├── migration/           # DB migrations
-│   └── utils/               # Test helpers
-└── thoughts-frontend/       # Next.js frontend
-    ├── app/                 # App Router pages
-    ├── components/          # React components
-    ├── hooks/               # Custom hooks
-    └── lib/                 # API client, utils
+├── Cargo.toml             # Workspace root
+├── .env.example           # Backend env template
+├── compose.yml            # Dev Docker Compose
+├── compose.prod.yml       # Production Docker Compose
+├── Dockerfile             # Multi-stage build (api + worker binaries)
+├── nginx/
+├── crates/
+│   ├── domain/            # Pure domain types & port traits
+│   ├── application/       # Use cases (business logic)
+│   ├── api-types/         # REST request/response DTOs
+│   ├── presentation/      # Axum HTTP router, OpenAPI
+│   ├── bootstrap/         # API server binary
+│   ├── worker/            # Event worker binary
+│   └── adapters/
+│       ├── auth/
+│       ├── postgres/      # SQL repos + migrations/
+│       ├── postgres-search/
+│       ├── postgres-federation/
+│       ├── activitypub-base/
+│       ├── activitypub/
+│       ├── nats/
+│       ├── event-payload/
+│       └── event-transport/
+└── thoughts-frontend/     # Next.js frontend
+    ├── app/               # App Router pages
+    ├── components/        # React components (incl. federation/)
+    ├── hooks/
+    └── lib/               # API client, utils
 ```