diff --git a/src/transport/discovery-tags.test.ts b/src/transport/discovery-tags.test.ts
new file mode 100644
index 0000000..d26d03a
--- /dev/null
+++ b/src/transport/discovery-tags.test.ts
@@ -0,0 +1,174 @@
+import { describe, expect, test } from 'bun:test';
+import type { NostrEvent } from 'nostr-tools';
+import { NOSTR_TAGS } from '../core/constants.js';
+import {
+  getDiscoveryTags,
+  hasEventTag,
+  hasSingleTag,
+  learnPeerCapabilities,
+  mergeDiscoveryTags,
+  parseDiscoveredPeerCapabilities,
+} from './discovery-tags.js';
+
+describe('Discovery Tags', () => {
+  describe('hasSingleTag', () => {
+    test('finds single-element tags', () => {
+      const tags = [['a'], ['b'], [NOSTR_TAGS.SUPPORT_ENCRYPTION]];
+      expect(hasSingleTag(tags, NOSTR_TAGS.SUPPORT_ENCRYPTION)).toBe(true);
+    });
+
+    test('rejects multi-element tags', () => {
+      const tags = [['a'], [NOSTR_TAGS.SUPPORT_ENCRYPTION, 'true']];
+      expect(hasSingleTag(tags, NOSTR_TAGS.SUPPORT_ENCRYPTION)).toBe(false);
+    });
+
+    test('returns false when tag is missing', () => {
+      const tags = [['a'], ['b']];
+      expect(hasSingleTag(tags, NOSTR_TAGS.SUPPORT_ENCRYPTION)).toBe(false);
+    });
+
+    test('returns false for empty tags array', () => {
+      expect(hasSingleTag([], NOSTR_TAGS.SUPPORT_ENCRYPTION)).toBe(false);
+    });
+  });
+
+  describe('hasEventTag', () => {
+    test('returns true for valid event with tag', () => {
+      const event = {
+        tags: [[NOSTR_TAGS.SUPPORT_ENCRYPTION]],
+      } as NostrEvent;
+      expect(hasEventTag(event, NOSTR_TAGS.SUPPORT_ENCRYPTION)).toBe(true);
+    });
+
+    test('returns false for valid event without tag', () => {
+      const event = {
+        tags: [['a']],
+      } as NostrEvent;
+      expect(hasEventTag(event, NOSTR_TAGS.SUPPORT_ENCRYPTION)).toBe(false);
+    });
+
+    test('returns false for undefined event', () => {
+      expect(hasEventTag(undefined, NOSTR_TAGS.SUPPORT_ENCRYPTION)).toBe(false);
+    });
+
+    test('returns false for event with undefined tags', () => {
+      const event = {} as NostrEvent;
+      expect(hasEventTag(event, NOSTR_TAGS.SUPPORT_ENCRYPTION)).toBe(false);
+    });
+  });
+
+  describe('getDiscoveryTags', () => {
+    test('filters out routing tags and clones remaining tags', () => {
+      const originalTags = [
+        ['e', '123'],
+        ['p', 'abc'],
+        ['custom_tag', 'value'],
+        [NOSTR_TAGS.SUPPORT_ENCRYPTION],
+      ];
+      const result = getDiscoveryTags(originalTags);
+
+      expect(result).toEqual([
+        ['custom_tag', 'value'],
+        [NOSTR_TAGS.SUPPORT_ENCRYPTION],
+      ]);
+
+      // Verify cloning
+      expect(result[0]).not.toBe(originalTags[2]);
+      expect(result[1]).not.toBe(originalTags[3]);
+    });
+
+    test('returns empty array for empty input', () => {
+      expect(getDiscoveryTags([])).toEqual([]);
+    });
+
+    test('allows unknown tag names to pass through', () => {
+      const tags = [
+        ['unknown', 'data'],
+        ['x', 'y', 'z'],
+      ];
+      expect(getDiscoveryTags(tags)).toEqual([
+        ['unknown', 'data'],
+        ['x', 'y', 'z'],
+      ]);
+    });
+  });
+
+  describe('learnPeerCapabilities', () => {
+    test('toggles flags independently based on tags', () => {
+      const emptyCaps = learnPeerCapabilities([]);
+      expect(emptyCaps.supportsEncryption).toBe(false);
+      expect(emptyCaps.supportsEphemeralEncryption).toBe(false);
+      expect(emptyCaps.supportsOversizedTransfer).toBe(false);
+
+      const encCaps = learnPeerCapabilities([[NOSTR_TAGS.SUPPORT_ENCRYPTION]]);
+      expect(encCaps.supportsEncryption).toBe(true);
+      expect(encCaps.supportsEphemeralEncryption).toBe(false);
+      expect(encCaps.supportsOversizedTransfer).toBe(false);
+
+      const allCaps = learnPeerCapabilities([
+        [NOSTR_TAGS.SUPPORT_ENCRYPTION],
+        [NOSTR_TAGS.SUPPORT_ENCRYPTION_EPHEMERAL],
+        [NOSTR_TAGS.SUPPORT_OVERSIZED_TRANSFER],
+      ]);
+      expect(allCaps.supportsEncryption).toBe(true);
+      expect(allCaps.supportsEphemeralEncryption).toBe(true);
+      expect(allCaps.supportsOversizedTransfer).toBe(true);
+    });
+  });
+
+  describe('parseDiscoveredPeerCapabilities', () => {
+    test('performs full parse including filtering and capabilities extraction', () => {
+      const tags = [
+        ['e', '123'],
+        [NOSTR_TAGS.SUPPORT_ENCRYPTION],
+        ['custom_tag'],
+        [NOSTR_TAGS.SUPPORT_OVERSIZED_TRANSFER],
+      ];
+
+      const result = parseDiscoveredPeerCapabilities(tags);
+
+      expect(result.discoveryTags).toEqual([
+        [NOSTR_TAGS.SUPPORT_ENCRYPTION],
+        ['custom_tag'],
+        [NOSTR_TAGS.SUPPORT_OVERSIZED_TRANSFER],
+      ]);
+      expect(result.supportsEncryption).toBe(true);
+      expect(result.supportsEphemeralEncryption).toBe(false);
+      expect(result.supportsOversizedTransfer).toBe(true);
+    });
+  });
+
+  describe('mergeDiscoveryTags', () => {
+    test('deduplicates tags, preserves order, and clones elements', () => {
+      const currentTags = [
+        ['a', '1'],
+        ['b', '2'],
+      ];
+      const incomingTags = [
+        ['b', '2'], // duplicate
+        ['c', '3'],
+        ['a', '1'], // duplicate
+      ];
+
+      const result = mergeDiscoveryTags(currentTags, incomingTags);
+
+      expect(result).toEqual([
+        ['a', '1'],
+        ['b', '2'],
+        ['c', '3'],
+      ]);
+
+      // Verify cloning
+      expect(result[0]).not.toBe(currentTags[0]);
+      expect(result[1]).not.toBe(currentTags[1]);
+      expect(result[1]).not.toBe(incomingTags[0]);
+      expect(result[2]).not.toBe(incomingTags[1]);
+    });
+
+    test('handles empty arrays', () => {
+      expect(mergeDiscoveryTags([], [])).toEqual([]);
+      expect(mergeDiscoveryTags([['a']], [])).toEqual([['a']]);
+      expect(mergeDiscoveryTags([], [['b']])).toEqual([['b']]);
+    });
+  });
+});