diff --git a/src/fennel-ls/handlers.fnl b/src/fennel-ls/handlers.fnl
index dcc6cbb..b013e8e 100644
--- a/src/fennel-ls/handlers.fnl
+++ b/src/fennel-ls/handlers.fnl
@@ -64,6 +64,7 @@ Every time the client sends a message, it gets handled by a function in the corr
 (λ requests.initialize [self send params]
   (state.init-state self params)
   {:capabilities capabilities
+   :positionEncoding self.position-encoding
    :serverInfo {:name "fennel-ls" :version "0.0.0"}})
 
 (λ requests.textDocument/definition [self send {: position :textDocument {: uri}}]
diff --git a/src/fennel-ls/state.fnl b/src/fennel-ls/state.fnl
index 6189e43..bfa00b3 100644
--- a/src/fennel-ls/state.fnl
+++ b/src/fennel-ls/state.fnl
@@ -100,10 +100,27 @@ in the \"self\" object."
 (λ make-configuration [?c]
   (make-configuration-from-template default-configuration ?c))
 
+(λ choose-position-encoding [init-params]
+  "fennel-ls natively uses utf-8, so ideally we will choose positionEncoding=utf-8.
+However, fennel-ls can fall back to positionEncoding=utf-16 (with a performance hit)."
+  (let [?position-encodings (?. init-params :capabilities :general :positionEncodings)
+        utf8?
+        (if (= (type ?position-encodings) :table)
+          (accumulate [utf-8? false
+                       _ encoding (ipairs ?position-encodings)]
+            (or (= encoding :utf-8)
+                (= encoding :utf8)))
+          false)]
+    (if utf8?
+     :utf-8
+     :utf-16)))
+
+
 (λ init-state [self params]
   (set self.files {})
   (set self.modules {})
   (set self.root-uri params.rootUri)
+  (set self.position-encoding (choose-position-encoding params))
   (set self.configuration (make-configuration)))
 
 (λ write-configuration [self ?configuration]
diff --git a/test/capabilities-test.fnl b/test/capabilities-test.fnl
new file mode 100644
index 0000000..521445a
--- /dev/null
+++ b/test/capabilities-test.fnl
@@ -0,0 +1,61 @@
+(import-macros {: is-matching : is-casing : describe : it : before-each} :test)
+(local {: view} (require :fennel))
+
+(local is (require :test.is))
+(local {: ROOT-URI
+        : ROOT-PATH
+        : create-client} (require :test.mock-client))
+
+(fn default [tbl field value]
+  (when (= nil (. tbl field))
+    (tset tbl field value)))
+
+(fn client-initialization [params]
+  (default params :clientInfo {:name "xerool's mock client" :version "9000"}) ;; not necessary, but why not have some fun?
+  (default params :rootPath ROOT-PATH) ;; deprecated, TODO delete
+  (default params :rootUri ROOT-URI)   ;; deprecated, TODO delete
+  {default params :workspaceFolders [{:name "my cool space" :uri ROOT-URI}]}
+  (default params :capabilities {})
+  (default params :trace "off") ;; | "messages" | "verbose"
+  ;; :initializationOptions {}) ;; LspAny
+  ;; :processId nil
+  ;; :locale "en" ;; I don't support languages/translations as of now
+  params)
+
+(describe "capabilities negotiations"
+
+  ; (it "chooses utf-16"
+  ;   (let [(self [response])
+  ;         (create-client
+  ;           {:params
+  ;             (client-initialization
+  ;                {:capabilities
+  ;                  {:general
+  ;                    {:positionEncodings
+  ;                      [:utf-16]}}})})]
+  ;     (is.equal :utf-16 (. response :result :positionEncoding))
+  ;     (self:open-file! "foo.fnl" "(let [𐐀𐐀 100] 𐐀𐐀)")
+  ;     (let [[response] (self:definition "foo.fnl" 0 16)]
+  ;       (is.equal 6 response.result.range.start.character)
+  ;       (is.equal 10 response.result.range.end.character))))
+
+  (it "chooses utf-8 if at all possible"
+    (let [(self [response])
+          (create-client
+            {:params
+             (client-initialization
+               {:capabilities
+                 {:general
+                   {:positionEncodings
+                     [:utf-16 :utf-8]}}})})]
+      (is.equal :utf-8 (. response :result :positionEncoding))
+      (self:open-file! "foo.fnl" "(let [𐐀𐐀 100] 𐐀𐐀)")
+      (let [[response] (self:definition "foo.fnl" 0 20)]
+        (is.equal 6 response.result.range.start.character)
+        (is.equal 14 response.result.range.end.character)))))
+
+(it "falls back to utf-16"
+  (let [(self [response]) (create-client {:params (client-initialization {})})]
+    (is.equal :utf-16 (. response :result :positionEncoding))))
+
+
diff --git a/test/init.fnl b/test/init.fnl
index d37d954..b2c88e6 100644
--- a/test/init.fnl
+++ b/test/init.fnl
@@ -1,3 +1,4 @@
+(require :test.capabilities-test)
 (require :test.completion-test)
 (require :test.diagnostic-test)
 (require :test.goto-definition-test)
diff --git a/test/lust.lua b/test/lust.lua
index 73216c3..9c7cf05 100644
--- a/test/lust.lua
+++ b/test/lust.lua
@@ -64,7 +64,7 @@ function lust.it(name, fn)
       end
     end
   end
-  
+
   if has(arg, "--quit-at-first-test") then os.exit(1) end
 end
 
diff --git a/test/mock-client.fnl b/test/mock-client.fnl
index ac29897..010db0c 100644
--- a/test/mock-client.fnl
+++ b/test/mock-client.fnl
@@ -6,14 +6,11 @@
       (: :read :*a)
       (: :sub 1 -2) ;; take off newline
       (.. "/test/test-project")))
+
 (local ROOT-URI
   (.. "file://" ROOT-PATH))
 
-(local initialization-message
-  {:id 1
-   :jsonrpc "2.0"
-   :method "initialize"
-   :params
+(local default-params
    {:capabilities {}
     :clientInfo {:name "Neovim" :version "0.7.2"}
     :initializationOptions {}
@@ -22,17 +19,23 @@
     :rootUri ROOT-URI
     :trace "off"
     :workspaceFolders [{:name ROOT-PATH
-                        :uri ROOT-URI}]}})
+                        :uri ROOT-URI}]})
 
 (local mt {})
-(fn create-client [?config]
-  (let [self (doto {:server [] :prev-id 1} (setmetatable mt))]
-    (dispatch.handle* self.server initialization-message)
-    (if ?config
-      (dispatch.handle* self.server {:jsonrpc "2.0"
-                                     :method :workspace/didChangeConfiguration
-                                     :params {:settings ?config}}))
-    self))
+(fn create-client [?opts]
+  (let [self (doto {:server [] :prev-id 1} (setmetatable mt))
+        initialize {:id 1
+                    :jsonrpc "2.0"
+                    :method "initialize"
+                    :params (or (?. ?opts :params) default-params)}
+        result (dispatch.handle* self.server initialize)]
+    (case (?. ?opts :settings)
+      settings
+      (dispatch.handle* self.server
+        {:jsonrpc "2.0"
+         :method :workspace/didChangeConfiguration
+         :params {: settings}}))
+    (values self result)))
 
 (fn next-id! [self]
   (set self.prev-id (+ self.prev-id 1))
@@ -80,4 +83,5 @@
       : references})
 
 {: create-client
- : ROOT-URI}
+ : ROOT-URI
+ : ROOT-PATH}
diff --git a/test/references-test.fnl b/test/references-test.fnl
index 1658b82..fcd3db5 100644
--- a/test/references-test.fnl
+++ b/test/references-test.fnl
@@ -26,6 +26,22 @@
     (check-references "(let [x 10] x)" 0 6
       [{:uri filename :range (message.pos->range 0 12 0 13)}]))
 
+  (let [x 10] x x x)
+  (it "finds multiple reference from let"
+    (check-references "(let [x 10] x x x)" 0 6
+      [{:uri filename :range (message.pos->range 0 12 0 13)}
+       {:uri filename :range (message.pos->range 0 14 0 15)}
+       {:uri filename :range (message.pos->range 0 16 0 17)}]))
+
+  (it "finds a reference from fn"
+    (check-references "(fn x []) x" 0 10
+      [{:uri filename :range (message.pos->range 0 10 0 11)}]))
+
+  ; (it "finds a reference from fn"
+  ;   (check-references "(fn x []) x" 0 4
+  ;     [{:uri filename :range (message.pos->range 0 10 0 11)}]))
+
+
   (it "doesn't crash here"
     (check-references "(let [x nil] x.y)" 0 14
       nil)))
diff --git a/test/settings-test.fnl b/test/settings-test.fnl
index ddca2bc..d505af3 100644
--- a/test/settings-test.fnl
+++ b/test/settings-test.fnl
@@ -1,12 +1,13 @@
 (import-macros {: is-matching : describe : it : before-each} :test)
 (local is (require :test.is))
+(local {: view} (require :fennel))
 
 (local {: ROOT-URI
         : create-client} (require :test.mock-client))
 
 (describe "settings"
   (it "can set the path"
-    (let [client (doto (create-client {:fennel-ls {:fennel-path "./?/?.fnl"}})
+    (let [client (doto (create-client {:settings {:fennel-ls {:fennel-path "./?/?.fnl"}}})
                    (: :open-file! (.. ROOT-URI :/test.fnl) "(local {: this-is-in-modname} (require :modname))"))
           result (client:definition (.. ROOT-URI :/test.fnl) 0 12)]
       (is-matching
@@ -15,9 +16,9 @@
         "error message")))
 
   (it "can set the macro path"
-    (let [client (create-client {:fennel-ls {:macro-path "./?/?.fnl"}})
+    (let [client (create-client {:settings {:fennel-ls {:macro-path "./?/?.fnl"}}})
           responses (client:open-file! (.. ROOT-URI :/test.fnl) "(import-macros {: this-is-in-modname} :modname)")]
-      (assert (not (. responses 1 :params 1)) "if the import-macros fails it generates a diagnostic (for now at least)")))
+      (assert (not (. responses 1 :params :diagnostics 1)) "if the import-macros fails it generates a diagnostic (for now at least)")))
 
   ;; (it "recompiles modules if the macro files are modified)"
 
@@ -38,7 +39,7 @@
 
   ;; I suspect this test will fail when I put warnings for module return type
   (it "can disable some lints"
-    (let [client (create-client {:fennel-ls {:checks {:unused-definition false}}})
+    (let [client (create-client {:settings {:fennel-ls {:checks {:unused-definition false}}}})
           responses (client:open-file! (.. ROOT-URI :/test.fnl) "(local x 10)")]
       (is-matching responses
         [{:method :textDocument/publishDiagnostics