feat: fix Squad version detection, implement /squad-update (v0.1.2)

- Read version from squad/package.json (squad/VERSION never existed upstream)
- Fix all version reads: version.ts, coordinator.ts, system-prompt.ts, recovery.ts
- Rewrite scripts/sync-squad.ts for git submodule model (retire tarball sync)
- Fix scripts/check-version.ts path bug
- Implement /squad-update command (was a stub)
- Add startup update-available check
- Fix stale mock in tests/context/recovery.test.ts

Co-authored-by: Copilot <223556219+Copilot@users.noreply.github.com>

Author: KieraKujisawa

CHANGELOG.md

@@ -6,6 +6,22 @@ Format follows [Keep a Changelog](https://keepachangelog.com/en/1.1.0/).
 
 ---
 
+## [0.1.2] — 2026-06-03
+
+### Fixed
+- `squad/VERSION` never existed in upstream `bradygaster/squad` — all startup version reads were broken. Version now read from `squad/package.json` across all modules (`version.ts`, `coordinator.ts`, `system-prompt.ts`, `context/recovery.ts`)
+- `scripts/check-version.ts` pointed to non-existent `{sovereignRoot}/squad/VERSION`; fixed to read `packages/coordinator/squad/package.json`
+
+### Changed
+- `scripts/sync-squad.ts` rewritten for git submodule model — replaces legacy tarball download/extract flow with `git fetch --tags` + `git checkout v{version}`
+- `src/upstream/sync.ts` tarball sync logic (`syncSquadUpstream()`) retired; `checkForUpdates()` retained
+
+### Added
+- `/squad-update` command implemented (previously a stub) — fetches latest Squad submodule tag, checks out, updates `package.json` squad fields, reloads extension
+- Startup update-available check: notifies on newer Squad submodule tag or newer `@pi-squad/coordinator` npm version (non-blocking, fire-and-forget)
+
+---
+
 ## [0.1.1] — 2026-06-03
 
 ### Security

package.json

@@ -1,6 +1,6 @@
 {
   "name": "@pi-squad/coordinator",
-  "version": "0.1.1",
+  "version": "0.1.2",
   "description": "Bring Squad's multi-agent coordination to Pi — your whole team, no cloud required",
   "type": "module",
   "main": "./dist/index.js",

src/context/recovery.ts

@@ -415,8 +415,9 @@ function estimateDroppableSections(ctx: RecoveryContext): Map<string, number> {
 
 async function readSquadVersion(): Promise<string> {
   try {
-    const raw = await readFile(new URL("../../squad/VERSION", import.meta.url), "utf8");
-    return raw.trim() || "unknown";
+    const raw = await readFile(new URL("../../squad/package.json", import.meta.url), "utf8");
+    const pkg = JSON.parse(raw) as { version?: string };
+    return pkg.version?.trim() || "unknown";
   } catch {
     return "unknown";
   }

src/coordinator/coordinator.ts

@@ -4,7 +4,7 @@
  */
 
 import { readFile } from "node:fs/promises";
-import { join, resolve } from "node:path";
+import { join } from "node:path";
 import { fileURLToPath } from "node:url";
 
 import type { ExtensionAPI } from "@earendil-works/pi-coding-agent";
@@ -147,14 +147,15 @@ async function readSquadMeta(): Promise<PackageSquadMeta | null> {
   }
 }
 
-async function readSquadVersion(teamRoot: string): Promise<string | null> {
-  const versionPath = resolve(new URL("../../squad/VERSION", import.meta.url).pathname);
-  const fromVendored = await readFileSafe(versionPath);
-  if (fromVendored) {
-    return fromVendored.trim();
+async function readSquadVersion(_teamRoot: string): Promise<string | null> {
+  try {
+    const packageJsonPath = fileURLToPath(new URL("../../squad/package.json", import.meta.url));
+    const raw = await readFile(packageJsonPath, "utf8");
+    const pkg = JSON.parse(raw) as { version?: string };
+    return pkg.version?.trim() ?? null;
+  } catch {
+    return null;
   }
-
-  return readFileSafe(join(teamRoot, ".squad", "VERSION"));
 }
 
 async function readAgentPrompt(): Promise<string> {

src/coordinator/system-prompt.ts

@@ -13,8 +13,8 @@ import { sanitize } from "../context/ingestion/sanitizer.js";
 const SQUAD_AGENT_MD = fileURLToPath(
   new URL("../../squad/.github/agents/squad.agent.md", import.meta.url),
 );
-const SQUAD_VERSION_FILE = fileURLToPath(
-  new URL("../../squad/VERSION", import.meta.url),
+const SQUAD_PACKAGE_JSON = fileURLToPath(
+  new URL("../../squad/package.json", import.meta.url),
 );
 const TEAM_MD_FILENAME = "team.md";
 const ROUTING_MD_FILENAME = "routing.md";
@@ -189,12 +189,17 @@ export async function getSystemPrompt(teamRoot: string): Promise<string> {
   const routingPath = join(teamRoot, ".squad", ROUTING_MD_FILENAME);
   const decisionsPath = join(teamRoot, ".squad", DECISIONS_MD_FILENAME);
 
-  const squadVersionPromise = readFile(SQUAD_VERSION_FILE, "utf8").catch(() => {
-    console.warn(
-      "[pi-squad] Could not read squad/VERSION — version display may show placeholder",
-    );
-    return null;
-  });
+  const squadVersionPromise = readFile(SQUAD_PACKAGE_JSON, "utf8")
+    .then((raw) => {
+      const pkg = JSON.parse(raw) as { version?: string };
+      return pkg.version?.trim() ?? null;
+    })
+    .catch(() => {
+      console.warn(
+        "[pi-squad] Could not read squad/package.json — version display may show placeholder",
+      );
+      return null;
+    });
 
   const [squadAgent, squadVersion, team, routing, decisions] = await Promise.all([
     readRequiredFile(SQUAD_AGENT_MD),