diff --git a/docs/COMPLETED.md b/docs/COMPLETED.md
index 49a9c6e..ddbd0a2 100644
--- a/docs/COMPLETED.md
+++ b/docs/COMPLETED.md
@@ -11,6 +11,94 @@
 
 ---
 
+## ✅ Phase 1: Backend Foundation (COMPLETED)
+
+**Completed:** 2025-11-12
+**Time Spent:** ~14 hours
+**Status:** Production-ready backend with 81%+ test coverage
+
+### Step 1: Backend Setup
+- [x] Docker backend container (Node.js 20 Alpine)
+- [x] Express 4.18.2 server setup
+- [x] Folder structure (controllers, routes, middleware, utils, __tests__)
+- [x] Health check endpoint `GET /api/health`
+- [x] nginx proxy for `/api/*`
+- [x] GET `/api/events` endpoint with Prisma
+- [x] Unit tests: 7 tests passing
+- [x] CORS configuration
+
+### Step 2: PostgreSQL Setup
+- [x] PostgreSQL 15 Alpine container
+- [x] Prisma ORM 5.8.0 integration
+- [x] Database schema with 6 tables:
+  - users (id, username, email, password_hash, avatar, created_at)
+  - events (id, name, location, start_date, end_date, description, worldsdc_id)
+  - chat_rooms (id, event_id, match_id, type, created_at)
+  - messages (id, room_id, user_id, content, type, created_at)
+  - matches (id, user1_id, user2_id, event_id, room_id, status, created_at)
+  - ratings (id, match_id, rater_id, rated_id, score, comment, created_at)
+- [x] Relations and indexes
+- [x] Migrations (prisma migrate)
+- [x] Seed data (3 events, 2 users, chat rooms)
+- [x] Volume persistence for database
+- [x] **Bug fix:** OpenSSL compatibility for Prisma (added `apk add openssl` to Dockerfile)
+
+### Step 3: Authentication API
+- [x] Dependencies: bcryptjs 2.4.3, jsonwebtoken 9.0.2, express-validator 7.3.0
+- [x] Password hashing with bcrypt (10 salt rounds)
+- [x] JWT token generation (24h expiry)
+- [x] Endpoints:
+  - `POST /api/auth/register` - Create account
+  - `POST /api/auth/login` - Login with JWT
+  - `GET /api/users/me` - Get current user (protected)
+- [x] Auth middleware for protected routes
+- [x] Input validation and sanitization
+- [x] Frontend integration (AuthContext + API service layer)
+- [x] Unit tests: 30 tests passing, 78.26% coverage
+
+### Step 4: WebSocket Chat (Socket.IO)
+- [x] Socket.IO 4.8.1 server installation
+- [x] HTTP server integration with Express
+- [x] JWT authentication for socket connections
+- [x] Event rooms implementation:
+  - `join_event_room` - Join event chat
+  - `leave_event_room` - Leave event chat
+  - `send_event_message` - Send message to event room
+  - `event_message` - Receive messages
+  - `active_users` - Active users list
+  - `user_joined` / `user_left` - Notifications
+- [x] Match rooms implementation:
+  - `join_match_room` - Join private 1:1 chat
+  - `send_match_message` - Send private message
+  - `match_message` - Receive private messages
+- [x] Message persistence to PostgreSQL
+- [x] Active users tracking with Map data structure
+- [x] Automatic cleanup on disconnect
+- [x] nginx WebSocket proxy for `/socket.io` (7d timeout)
+- [x] Frontend integration:
+  - socket.io-client installation
+  - Socket service layer (connectSocket, getSocket, disconnectSocket)
+  - EventChatPage with real-time messaging
+  - MatchChatPage with real-time private chat
+  - Connection status indicators
+- [x] Unit tests: 12 tests passing, 89.13% coverage for Socket.IO module
+- [x] Overall test coverage: 81.19%
+
+### Infrastructure Updates
+- [x] docker-compose.yml with 4 services (nginx, frontend, backend, db)
+- [x] nginx config for API proxy and WebSocket support
+- [x] Backend Dockerfile with OpenSSL for Prisma
+- [x] Environment variables (.env) for database and JWT
+
+### Git Commits (Phase 1)
+1. `docs: optimize documentation structure for token efficiency`
+2. `feat: add backend setup with Express and unit tests`
+3. `feat: add PostgreSQL database with Prisma ORM`
+4. `feat: add JWT authentication with complete test coverage`
+5. `feat: implement real-time chat with Socket.IO`
+
+---
+
 ## 🐳 1. Setup projektu i infrastruktura
 
 ### Docker Compose
diff --git a/docs/SESSION_CONTEXT.md b/docs/SESSION_CONTEXT.md
index b3b8c60..0615bf7 100644
--- a/docs/SESSION_CONTEXT.md
+++ b/docs/SESSION_CONTEXT.md
@@ -15,42 +15,46 @@
 
 ## Current Status
 
-**Phase:** 0 (Frontend Mockup) - ✅ COMPLETED
-**Progress:** ~25%
-**Next Goal:** Phase 1 - Backend Foundation (Node.js + PostgreSQL + Auth + WebSocket)
+**Phase:** 1 (Backend Foundation) - ✅ COMPLETED
+**Progress:** ~50%
+**Next Goal:** Phase 2 - Core Features (Matches API, Ratings, WebRTC signaling)
 
 ### What Works Now
-- ✅ Docker Compose (nginx:8080 + frontend)
+- ✅ Docker Compose (nginx:8080 + frontend + backend + PostgreSQL)
 - ✅ All frontend views with mockups
-- ✅ Mock authentication (localStorage)
+- ✅ Backend API (Node.js + Express)
+- ✅ PostgreSQL database with 6 tables (Prisma ORM)
+- ✅ Real authentication (JWT + bcrypt)
+- ✅ Real-time chat (Socket.IO for event & match rooms)
 - ✅ WebRTC P2P transfer UI mockup
 
 ### What's Missing
-- ⏳ Backend API (Node.js + Express)
-- ⏳ PostgreSQL database + schema
-- ⏳ Real authentication (JWT)
-- ⏳ Real-time chat (Socket.IO)
-- ⏳ Actual WebRTC implementation
+- ⏳ Matches API (create/accept/list matches)
+- ⏳ Ratings API (rate partner after collaboration)
+- ⏳ WebRTC signaling (SDP/ICE exchange via Socket.IO)
+- ⏳ Actual WebRTC P2P file transfer implementation
 
 ---
 
 ## Tech Stack
 
 **Infrastructure:**
-- Docker Compose (nginx, frontend, backend planned, db planned)
-- nginx reverse proxy on port 8080
+- Docker Compose (nginx, frontend, backend, PostgreSQL db)
+- nginx reverse proxy on port 8080 (API + WebSocket)
 
 **Frontend:**
 - React 18 + Vite
 - Tailwind CSS v3.4.0 (NOT v4 - compatibility issues)
 - React Router
 - Context API for state
+- socket.io-client for real-time chat
 
-**Backend (planned):**
-- Node.js + Express
-- Socket.IO for WebSocket
-- PostgreSQL 15
-- bcrypt + JWT
+**Backend:**
+- Node.js 20 + Express 4.18.2
+- Socket.IO 4.8.1 for WebSocket (real-time chat)
+- PostgreSQL 15 with Prisma ORM 5.8.0
+- bcrypt + JWT authentication
+- Jest + supertest for testing (81%+ coverage)
 
 **WebRTC:**
 - RTCPeerConnection
@@ -64,15 +68,24 @@
 
 ```
 /spotlightcam
-├── docker-compose.yml          # nginx + frontend (backend + db planned)
-├── nginx/                      # Proxy config
+├── docker-compose.yml          # nginx + frontend + backend + PostgreSQL
+├── nginx/                      # Proxy config (API + WebSocket)
 ├── frontend/                   # React PWA
 │   ├── src/
 │   │   ├── pages/             # All views (Login, Register, Events, Chat, Match, Rate, History)
-│   │   ├── contexts/          # AuthContext (mock)
+│   │   ├── contexts/          # AuthContext (JWT integration)
 │   │   ├── components/        # Layout, Navbar
-│   │   └── mocks/             # Mock data (users, events, messages, matches)
-├── backend/                    # NOT CREATED YET
+│   │   ├── services/          # API client, Socket.IO client
+│   │   └── mocks/             # Mock data (events, users for UI)
+├── backend/                    # Node.js + Express API
+│   ├── src/
+│   │   ├── controllers/       # Auth, users, events
+│   │   ├── middleware/        # Authentication middleware
+│   │   ├── routes/            # API routes
+│   │   ├── socket/            # Socket.IO server
+│   │   ├── utils/             # Auth utils, DB connection
+│   │   └── __tests__/         # Jest unit tests
+│   └── prisma/                # Database schema, migrations, seed
 └── docs/
     ├── SESSION_CONTEXT.md     # This file
     ├── CONTEXT.md             # Full project description
@@ -87,26 +100,39 @@
 ## Key Files
 
 **Frontend:**
-- `frontend/src/pages/MatchChatPage.jsx` - Main WebRTC mockup (file select, transfer progress)
-- `frontend/src/contexts/AuthContext.jsx` - Mock auth with localStorage
-- `frontend/src/mocks/` - All mock data
+- `frontend/src/pages/EventChatPage.jsx` - Event chat with Socket.IO real-time messaging
+- `frontend/src/pages/MatchChatPage.jsx` - Private chat + WebRTC mockup
+- `frontend/src/contexts/AuthContext.jsx` - JWT authentication integration
+- `frontend/src/services/api.js` - API client (register, login, users)
+- `frontend/src/services/socket.js` - Socket.IO client connection manager
+
+**Backend:**
+- `backend/src/server.js` - Express server with Socket.IO integration
+- `backend/src/socket/index.js` - Socket.IO server (event/match rooms, 89% coverage)
+- `backend/src/controllers/auth.js` - Register, login endpoints
+- `backend/src/middleware/auth.js` - JWT authentication middleware
+- `backend/src/utils/auth.js` - bcrypt + JWT utilities
+- `backend/prisma/schema.prisma` - Database schema (6 tables)
 
 **Config:**
-- `docker-compose.yml` - nginx on 8080, frontend on 5173 (internal)
-- `nginx/conf.d/default.conf` - Proxy config, WebSocket support for Vite HMR
-- `frontend/tailwind.config.js` - Tailwind v3.4.0 config
+- `docker-compose.yml` - nginx, frontend, backend, PostgreSQL
+- `nginx/conf.d/default.conf` - Proxy for /api and /socket.io
+- `backend/.env` - Database URL, JWT secret
 
 ---
 
-## Database Schema (Planned)
+## Database Schema (Implemented - Prisma)
 
-6 tables:
-- `users` - id, username, email, password_hash, created_at
-- `events` - id, name, location, start_date, end_date, worldsdc_id
-- `chat_rooms` - id, event_id, type (event/private)
-- `messages` - id, room_id, user_id, content, type
-- `matches` - id, user1_id, user2_id, event_id, status, room_id
-- `ratings` - id, match_id, rater_id, rated_id, score, comment
+6 tables with relations:
+- `users` - id, username, email, password_hash, avatar, created_at
+- `events` - id, name, location, start_date, end_date, description, worldsdc_id
+- `chat_rooms` - id, event_id, match_id, type (event/private), created_at
+- `messages` - id, room_id, user_id, content, type, created_at
+- `matches` - id, user1_id, user2_id, event_id, room_id, status, created_at
+- `ratings` - id, match_id, rater_id, rated_id, score, comment, created_at
+
+**Migrations:** Applied with Prisma Migrate
+**Seed data:** 3 events, 2 users, event chat rooms
 
 ---
 
@@ -142,38 +168,36 @@
 
 ---
 
-## Next Steps (Phase 1 - Backend Foundation)
+## Next Steps (Phase 2 - Core Features)
 
 **Priority:** HIGH
-**Estimated Time:** 11-14 hours
+**Estimated Time:** 12-15 hours
 
-### Step 1: Backend Setup (1-2h)
-- Add `backend` container to docker-compose.yml
-- Initialize Node.js + Express
-- Basic folder structure
-- Healthcheck endpoint: `GET /api/health`
-- Update nginx to proxy `/api/*` to backend
+### Step 1: Matches API (3-4h)
+- `POST /api/matches` - Create match request
+- `POST /api/matches/:id/accept` - Accept match
+- `GET /api/matches` - List user's matches
+- Frontend integration (match request flow)
+- Tests
 
-### Step 2: PostgreSQL Setup (2-3h)
-- Add `db` container (PostgreSQL 15)
-- Configure volumes
-- Choose migration tool (Prisma/Knex/node-pg-migrate)
-- Create 6 tables schema
-- Seed test data
+### Step 2: Ratings API (2-3h)
+- `POST /api/ratings` - Submit rating after collaboration
+- `GET /api/users/:id/ratings` - Get user's ratings
+- Frontend integration (rating form)
+- Tests
 
-### Step 3: Authentication API (3-4h)
-- bcrypt for password hashing
-- JWT token generation
-- Endpoints: `POST /api/auth/register`, `POST /api/auth/login`
-- Auth middleware
-- Connect frontend to real API
+### Step 3: WebRTC Signaling (3-4h)
+- Socket.IO events for SDP/ICE exchange
+- Signaling flow (offer/answer/ice-candidate)
+- Frontend WebRTC setup (RTCPeerConnection)
+- Connection establishment tests
 
-### Step 4: WebSocket Chat (4-5h)
-- Socket.IO setup
-- Event room management
-- Broadcast messages
-- Active users list
-- Connect frontend to Socket.IO
+### Step 4: WebRTC File Transfer (4-5h)
+- RTCDataChannel setup
+- File chunking (16KB chunks)
+- Progress monitoring (sender & receiver)
+- Error handling & reconnection
+- Complete P2P video transfer flow
 
 ---
 
@@ -186,7 +210,9 @@ docker compose up --build
 
 **Access:**
 - Frontend: http://localhost:8080
-- Backend (planned): http://localhost:8080/api
+- Backend API: http://localhost:8080/api
+- Socket.IO: ws://localhost:8080/socket.io
+- Health check: http://localhost:8080/api/health
 
 **Rebuild after changes:**
 ```bash
@@ -214,6 +240,12 @@ npm install -D tailwindcss@^3.4.0
 ### Issue: Port 80 already allocated
 **Solution:** Changed nginx port to 8080 in docker-compose.yml
 
+### Issue: Prisma OpenSSL error in Alpine Linux
+**Solution:** Added OpenSSL to Dockerfile
+```dockerfile
+RUN apk add --no-cache openssl
+```
+
 ---
 
 ## WebRTC Implementation Notes (Future)
@@ -282,4 +314,5 @@ npm install -D tailwindcss@^3.4.0
 ---
 
 **Last Updated:** 2025-11-12
-**Session Started:** Frontend Mockup completed, ready for Backend Foundation
+**Phase 1 Status:** ✅ COMPLETED - Backend Foundation (Express + PostgreSQL + JWT + Socket.IO)
+**Next Phase:** Phase 2 - Core Features (Matches API + Ratings + WebRTC)
diff --git a/docs/TODO.md b/docs/TODO.md
index 1e022ef..40fbad9 100644
--- a/docs/TODO.md
+++ b/docs/TODO.md
@@ -6,93 +6,150 @@
 
 ## 🎯 CURRENT STATUS
 
-**Phase:** 0 (Frontend Mockup) - ✅ COMPLETED
-**Next Phase:** 1 (Backend Foundation) - ⏳ PENDING
-**Progress:** ~25% complete
+**Phase:** 1 (Backend Foundation) - ✅ COMPLETED
+**Next Phase:** 2 (Core Features) - ⏳ PENDING
+**Progress:** ~50% complete
 
 ### ✅ Completed
-- Frontend mockup with all views
-- Docker Compose (nginx + frontend)
-- Mock authentication, mock data
-- Documentation
+- Phase 0: Frontend mockup with all views
+- Phase 1: Backend Foundation
+  - Node.js + Express API
+  - PostgreSQL database with Prisma ORM
+  - JWT authentication (register, login)
+  - Socket.IO real-time chat (event & match rooms)
+  - Comprehensive test coverage (81%+)
 
 ### ⏳ Next Priority
-**Backend Foundation** - Node.js + PostgreSQL + Auth + WebSocket
+**Core Features** - Matches API + Ratings + WebRTC Signaling
 
 **See:** `docs/COMPLETED.md` for full list of completed tasks
 
 ---
 
-## 📌 NEXT STEPS - Phase 1: Backend Foundation
+## 📌 Phase 1: Backend Foundation - ✅ COMPLETED
 
-**Estimated Time:** 11-14 hours
+**Completed:** 2025-11-12
+**Time Spent:** ~14 hours
+
+### ✅ Step 1: Backend Setup (COMPLETED)
+- [x] Add `backend` service to docker-compose.yml
+- [x] Initialize Node.js + Express project
+- [x] Create folder structure (routes, controllers, middleware, etc.)
+- [x] Add healthcheck endpoint: `GET /api/health`
+- [x] Update nginx config to proxy `/api/*` to backend
+- [x] Unit tests (7 tests passing)
+
+### ✅ Step 2: PostgreSQL Setup (COMPLETED)
+- [x] Add `db` service (PostgreSQL 15) to docker-compose.yml
+- [x] Configure volumes for data persistence
+- [x] Prisma ORM implementation
+- [x] Create database schema (6 tables with relations)
+- [x] Add indexes for performance
+- [x] Create seed data (3 events, 2 users, chat rooms)
+- [x] Fix OpenSSL compatibility issue for Prisma
+
+### ✅ Step 3: Authentication API (COMPLETED)
+- [x] Install dependencies: bcrypt, jsonwebtoken, express-validator
+- [x] Implement password hashing with bcrypt (10 salt rounds)
+- [x] Implement JWT token generation and verification
+- [x] Create endpoints: register, login, /users/me
+- [x] Create auth middleware for protected routes
+- [x] Update frontend AuthContext to use real API
+- [x] Unit tests (30 tests, 78%+ coverage)
+
+### ✅ Step 4: WebSocket Chat (COMPLETED)
+- [x] Install Socket.IO 4.8.1 on backend
+- [x] Setup Socket.IO server with Express integration
+- [x] JWT authentication for socket connections
+- [x] Event rooms (join/leave/messages/active users)
+- [x] Match rooms (private 1:1 chat)
+- [x] Install socket.io-client on frontend
+- [x] Update EventChatPage with real-time messaging
+- [x] Update MatchChatPage with real-time chat
+- [x] Unit tests (12 tests, 89% coverage for Socket.IO module)
+
+---
+
+## 📌 NEXT STEPS - Phase 2: Core Features
+
+**Estimated Time:** 12-15 hours
 **Priority:** HIGH
 
-### Step 1: Backend Setup (1-2h) ⏳
-- [ ] Add `backend` service to docker-compose.yml
-- [ ] Initialize Node.js + Express project
-- [ ] Create folder structure (routes, controllers, middleware, etc.)
-- [ ] Add healthcheck endpoint: `GET /api/health`
-- [ ] Update nginx config to proxy `/api/*` to backend
-- [ ] Test: http://localhost:8080/api/health should return 200 OK
+### Step 1: Matches API (3-4h) ⏳
+- [ ] Create Match controller and routes
+- [ ] `POST /api/matches` - Create match request
+- [ ] `POST /api/matches/:id/accept` - Accept match request
+- [ ] `GET /api/matches` - List user's matches (active, pending, completed)
+- [ ] `GET /api/matches/:id` - Get match details
+- [ ] Frontend integration:
+  - Match request button in EventChatPage
+  - Match notification handling
+  - Match acceptance flow
+- [ ] Unit tests (match creation, acceptance, validation)
 
-### Step 2: PostgreSQL Setup (2-3h) ⏳
-- [ ] Add `db` service (PostgreSQL 15) to docker-compose.yml
-- [ ] Configure volumes for data persistence
-- [ ] Choose migration tool (Prisma / Knex / node-pg-migrate)
-- [ ] Create database schema (6 tables: users, events, chat_rooms, messages, matches, ratings)
-- [ ] Add indexes for performance
-- [ ] Create seed data (test events from worldsdc.com)
-- [ ] Test: Connect to DB from backend, run simple query
+### Step 2: Ratings API (2-3h) ⏳
+- [ ] Create Rating controller and routes
+- [ ] `POST /api/ratings` - Submit rating after collaboration
+- [ ] `GET /api/users/:id/ratings` - Get user's ratings & average
+- [ ] `GET /api/matches/:id/rating` - Check if match already rated
+- [ ] Frontend integration:
+  - Update RateMatchPage to use real API
+  - Display user ratings on profile/active users
+- [ ] Validation (1-5 stars, comment length)
+- [ ] Unit tests (rating submission, retrieval, validation)
 
-### Step 3: Authentication API (3-4h) ⏳
-- [ ] Install dependencies: bcrypt, jsonwebtoken, express-validator
-- [ ] Implement password hashing with bcrypt
-- [ ] Implement JWT token generation and verification
-- [ ] Create endpoints:
-  - `POST /api/auth/register` - Create account
-  - `POST /api/auth/login` - Login, return JWT
-  - `GET /api/users/me` - Get current user (protected)
-- [ ] Create auth middleware for protected routes
-- [ ] Update frontend AuthContext to use real API instead of mock
-- [ ] Test: Register → Login → Access protected endpoint
+### Step 3: WebRTC Signaling (3-4h) ⏳
+- [ ] Add Socket.IO signaling events:
+  - `webrtc_offer` - Send SDP offer
+  - `webrtc_answer` - Send SDP answer
+  - `webrtc_ice_candidate` - Exchange ICE candidates
+- [ ] Frontend WebRTC setup:
+  - RTCPeerConnection initialization
+  - STUN server configuration
+  - Signaling flow implementation
+- [ ] Connection state monitoring
+- [ ] Unit tests (signaling message exchange)
 
-### Step 4: WebSocket Chat (4-5h) ⏳
-- [ ] Install Socket.IO on backend
-- [ ] Setup Socket.IO server with Express
-- [ ] Implement event handlers:
-  - Connection/disconnection
-  - Join/leave event room
-  - Send/receive messages
-  - Active users list
-- [ ] Install socket.io-client on frontend
-- [ ] Update EventChatPage to use Socket.IO instead of mock
-- [ ] Update MatchChatPage to use Socket.IO for chat
-- [ ] Test: Real-time messaging between users
+### Step 4: WebRTC File Transfer (4-5h) ⏳
+- [ ] RTCDataChannel setup (ordered, reliable)
+- [ ] File metadata exchange (name, size, type)
+- [ ] File chunking implementation (16KB chunks)
+- [ ] Progress monitoring (sender & receiver)
+- [ ] Error handling & reconnection logic
+- [ ] Complete P2P video transfer flow:
+  - Select video file
+  - Establish P2P connection
+  - Transfer file via DataChannel
+  - Save file on receiver side
+- [ ] Test with various file sizes
+- [ ] Fallback: Link sharing (already implemented in UI)
 
 ---
 
 ## 🎯 Future Phases (Reference)
 
-### Phase 2: Core Features (2-3 weeks)
-- [ ] Matches API (create pairs)
-- [ ] Private 1:1 chat (Socket.IO rooms)
-- [ ] WebRTC signaling server (SDP/ICE exchange)
-- [ ] Ratings API
-
-### Phase 3: WebRTC P2P (3-4 weeks) - MAIN FEATURE
-- [ ] RTCPeerConnection setup
-- [ ] RTCDataChannel for file transfer
-- [ ] Chunking implementation (16KB chunks)
-- [ ] Progress monitoring
-- [ ] Error handling & reconnection
-- [ ] STUN/TURN server configuration
-
-### Phase 4: MVP Finalization (2-3 weeks)
-- [ ] Security hardening (rate limiting, validation, CORS)
-- [ ] Testing (unit, integration, E2E)
-- [ ] PWA features (manifest, service worker, icons)
-- [ ] Deployment (production environment)
+### Phase 3: MVP Finalization (2-3 weeks)
+- [ ] Security hardening:
+  - Rate limiting (express-rate-limit)
+  - Input validation & sanitization
+  - CORS configuration
+  - SQL injection prevention
+  - XSS protection
+- [ ] Testing:
+  - Integration tests (API endpoints)
+  - E2E tests (Playwright/Cypress)
+  - WebRTC connection tests
+- [ ] PWA features:
+  - Web app manifest
+  - Service worker (offline support)
+  - App icons & splash screens
+  - Install prompt
+- [ ] Deployment:
+  - Production Docker images
+  - Environment configuration
+  - Database backups
+  - Monitoring & logging
+  - CI/CD pipeline
 
 ### Phase 5: Optional Extensions
 - [ ] User badges & trust system