diff --git a/CHANGELOG.md b/CHANGELOG.md
index 17322c4..64d37dd 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,6 +4,118 @@ All notable changes to the "claude-code-chat" extension will be documented in th
 
 Check [Keep a Changelog](http://keepachangelog.com/) for recommendations on how to structure this file.
 
+## [1.0.0] - 2025-01-15
+
+### 🚀 Major Features Added
+
+#### **Advanced Permissions Management System**
+- Complete permissions framework with MCP integration for secure tool execution
+- Interactive permission dialogs with detailed tool information and command previews
+- "Always Allow" functionality with smart command pattern matching for common tools (npm, git, docker, etc.)
+- YOLO mode for power users to skip all permission checks
+- Comprehensive permissions settings UI with ability to add/remove specific permissions
+- File system watcher for real-time permission request handling
+- Workspace-specific permission storage and management
+
+#### **MCP (Model Context Protocol) Server Management**
+- Complete MCP server configuration interface
+- Popular MCP servers gallery with one-click installation
+- Custom MCP server creation with validation
+- Server management (edit, delete, enable/disable)
+- Automatic permissions server integration
+- WSL path conversion for cross-platform compatibility
+
+#### **Sidebar Integration & Multi-Panel Support**
+- Native VS Code sidebar view with full chat functionality
+- Smart panel management (auto-close main panel when sidebar opens)
+- Persistent session state across panel switches
+- Proper webview lifecycle management
+- Activity bar integration with custom icon
+
+#### **Image & Clipboard Enhancements**
+- Drag-and-drop image support directly into chat
+- Clipboard image paste functionality (Ctrl+V for screenshots)
+- Multiple image selection with VS Code's native file picker
+- Automatic image organization in `.claude/claude-code-chat-images/` folder
+- Automatic `.gitignore` creation for image folders
+- Support for PNG, JPG, JPEG, GIF, SVG, WebP, BMP formats
+
+#### **Code Block & Syntax Improvements**
+- Enhanced markdown parsing with proper code block detection
+- Syntax highlighting for code blocks with language detection
+- Copy-to-clipboard functionality for code blocks
+- Improved inline code rendering
+- Better handling of technical identifiers and underscores
+
+### 🎨 UI/UX Improvements
+
+#### **Settings & Configuration**
+- Comprehensive settings modal with organized sections
+- YOLO mode toggle with visual warnings and explanations
+- Real-time settings synchronization between UI and VS Code config
+- Better visual hierarchy and professional styling
+- Smart configuration validation and error handling
+
+#### **Message & Chat Interface**
+- Improved message spacing and visual consistency
+- Enhanced tool result display with better formatting
+- Smart scrolling behavior (only auto-scroll if user is at bottom)
+- Loading indicators and processing states
+- Better error handling and user feedback
+
+#### **YOLO Mode Visual Design**
+- Less subtle YOLO mode section (increased opacity and size)
+- Changed warning icon from ⚠️ to 🚀 for less intimidating appearance
+- Soft tomato red styling that's noticeable but not scary
+- Clear explanation of YOLO mode functionality
+
+### 🔧 Technical Enhancements
+
+#### **Session & State Management**
+- Persistent session state across VS Code restarts
+- Proper cleanup of resources and event listeners
+- Better error handling for failed operations
+- Improved memory management for large conversations
+
+#### **Cross-Platform Compatibility**
+- Enhanced WSL support with proper path conversion
+- Windows-specific improvements and fixes
+- Better handling of different operating system environments
+- Improved subprocess management and cleanup
+
+#### **Performance Optimizations**
+- Reduced context usage with more efficient tool operations
+- Better file search and workspace integration
+- Optimized message handling and UI updates
+- Improved extension activation and initialization times
+
+#### **Developer Experience**
+- Better error messages and debugging information
+- Improved extension logging and troubleshooting
+- Enhanced development workflow support
+- Better TypeScript integration and type safety
+
+### 🐛 Bug Fixes
+- Fixed multiple permission prompts being sent simultaneously
+- Resolved panel management issues with multiple webviews
+- Fixed expand/collapse functionality for long content
+- Corrected Unix timestamp parsing for usage limit messages
+- Fixed WSL integration on Windows systems
+- Resolved markdown parsing issues with underscores in code
+- Fixed copy-paste functionality for images and code blocks
+- Corrected file path handling across different platforms
+
+### 🔄 Breaking Changes
+- Permission system now requires explicit approval for tool execution (unless YOLO mode is enabled)
+- Image files are now stored in `.claude/claude-code-chat-images/` instead of root directory
+- MCP configuration moved to extension storage instead of global config
+
+### 📚 Documentation & Community
+- Updated README with comprehensive feature documentation
+- Fixed GitHub issues link in repository
+- Enhanced examples and usage guides
+- Better onboarding experience for new users
+
 ## [0.1.3] - 2025-06-24
 
 ### 🚀 Features Added
diff --git a/README.md b/README.md
index b8883fd..da44132 100644
--- a/README.md
+++ b/README.md
@@ -15,11 +15,12 @@ Ditch the command line and experience Claude Code like never before. This extens
 ## ✨ **Why Choose Claude Code Chat?**
 
 🖥️ **No Terminal Required** - Beautiful chat interface replaces command-line interactions  
-⏪ **Restore Checkpoints** - Undo changes and restore code to any previous state  
+⏪ **Restore Checkpoints** - Undo changes and restore code to any previous state   
+🔌 **MCP Server Support** - Complete Model Context Protocol server management   
 💾 **Conversation History** - Automatic conversation history and session management  
-🎨 **VS Code Native** - Claude Code integrated directly into VS Code with native theming  
+🎨 **VS Code Native** - Claude Code integrated directly into VS Code with native theming and sidebar support  
 🧠 **Plan and Thinking modes** - Plan First and configurable Thinking modes for better results  
-⚡ **Smart File Context and Commands** - Reference any file with simple @ mentions and / for commands  
+⚡ **Smart File/Image Context and Custom Commands** - Reference any file, copy images or screenshots, and create custom commands  
 🤖 **Model Selection** - Choose between Opus, Sonnet, or Default based on your needs  
 🐧 **WSL Support** - Full Windows Subsystem for Linux integration and compatibility
 
@@ -34,8 +35,9 @@ Ditch the command line and experience Claude Code like never before. This extens
 - No terminal required - everything through the UI
 - Real-time streaming responses with typing indicators
 - One-click message copying with visual feedback
-- Rich markdown support for code blocks and formatting
+- Enhanced markdown support with syntax highlighting
 - Auto-resizing input that grows with your content
+- Copy-to-clipboard for code blocks
 
 ### ⏪ **Checkpoint & Session Management**
 - **Restore Checkpoints** - Instantly undo changes and restore to any previous state
@@ -45,9 +47,36 @@ Ditch the command line and experience Claude Code like never before. This extens
 - Real-time cost and token tracking
 - Session statistics and performance metrics
 
+### 🔌 **MCP Server Management** ⭐ **NEW IN V1.0**
+- **Popular Servers Gallery** - One-click installation of common MCP servers
+- **Custom Server Creation** - Build and configure your own MCP servers
+- **Server Management** - Edit, delete, enable/disable servers through UI
+- **Automatic Integration** - Seamless permissions and tool integration
+- **Cross-platform Support** - Full WSL compatibility with path conversion
+
+### 🔒 **Advanced Permissions System** ⭐ **NEW IN V1.0**
+- **Interactive Permission Dialogs** - Detailed tool information with command previews
+- **Always Allow Functionality** - Smart command pattern matching for common tools (npm, git, docker)
+- **YOLO Mode** - Skip all permission checks for power users
+- **Workspace Permissions** - Granular control over what tools can execute
+- **Real-time Permission Management** - Add/remove permissions through intuitive UI
+
+### 🖼️ **Image & Clipboard Support** ⭐ **NEW IN V1.0**
+- **Drag & Drop Images** - Simply drag images directly into the chat
+- **Clipboard Paste** - Press Ctrl+V to paste screenshots and copied images
+- **Multiple Image Selection** - Choose multiple images through VS Code's file picker
+- **Organized Storage** - Automatic organization in `.claude/claude-code-chat-images/`
+- **Format Support** - PNG, JPG, JPEG, GIF, SVG, WebP, BMP formats
+
+### 📱 **Sidebar Integration** ⭐ **NEW IN V1.0**
+- **Native VS Code Sidebar** - Full chat functionality in the sidebar panel
+- **Smart Panel Management** - Automatic switching between main and sidebar views
+- **Persistent Sessions** - State maintained across panel switches
+- **Activity Bar Integration** - Quick access from VS Code's activity bar
+
 ### 📁 **Smart File Integration**
 - Type `@` to instantly search and reference workspace files
-- Image attachments via file browser
+- Image attachments via file browser and copy-paste screeshots
 - Lightning-fast file search across your entire project
 - Seamless context preservation for multi-file discussions
 
@@ -55,6 +84,7 @@ Ditch the command line and experience Claude Code like never before. This extens
 - Visual dashboard showing all available Claude Code tools
 - Real-time tool execution with formatted results
 - Process control - start, stop, and monitor operations
+- Smart permission system for secure tool execution
 
 ### 🎨 **VS Code Integration**
 - Native theming that matches your editor
@@ -214,31 +244,39 @@ Example configuration in `settings.json`:
 - Type `@` followed by your search term to quickly reference files
 - Use `@src/` to narrow down to specific directories
 - Reference multiple files in one message for cross-file analysis
+- **NEW**: Copy-paste images directly into chat for visual context
+- **NEW**: Paste screenshots with Ctrl+V for instant visual communication
 
 ### ⚡ **Productivity Boosters**
 - **Creates checkpoints automatically** before changes for safe experimentation
 - **Restore instantly** if changes don't work out as expected
+- **NEW**: Permission system prevents accidental tool execution
+- **NEW**: YOLO mode for power users who want speed over safety
 - Use the stop button to cancel long-running operations
 - Copy message contents to reuse Claude's responses
 - Open history panel to reference previous conversations
+- **NEW**: Sidebar integration for multi-panel workflow
 
 ### 🎨 **Interface Customization**
 - The UI automatically adapts to your VS Code theme
 - Messages are color-coded: Green for you, Blue for Claude
 - Hover over messages to reveal the copy button
+- **NEW**: Enhanced code block rendering with syntax highlighting
+- **NEW**: Copy-to-clipboard functionality for code blocks
 
 ---
 
 ## 🔧 **Advanced Features**
 
 ### 🛠️ **Tool Integration**
-Claude Code Chat provides full access to all Claude Code tools:
-- **Bash** - Execute shell commands
+Claude Code Chat provides secure access to all Claude Code tools:
+- **Bash** - Execute shell commands with permission controls
 - **File Operations** - Read, write, and edit files
-- **Search** - Grep and glob pattern matching
+- **Search** - Grep and glob pattern matching across workspace
 - **Web** - Fetch and search web content
 - **Multi-edit** - Batch file modifications
-- **While in Beta, all tools are enabled by default, use at your own risk!**
+- **MCP Servers** - Extend functionality with Model Context Protocol servers
+- **Permissions System** - Granular control over tool execution for security
 
 ### 📊 **Analytics & Monitoring**
 - **Real-time cost tracking** - Monitor your API usage