diff --git a/codecov.yml b/codecov.yml
new file mode 100644
index 000000000..2825e2b1c
--- /dev/null
+++ b/codecov.yml
@@ -0,0 +1,18 @@
+coverage:
+  status:
+    project:
+      default:
+        # Allow project coverage to decrease, but require patch coverage
+        target: auto
+        threshold: 100%
+        if_ci_failed: error
+    patch:
+      default:
+        # Require all new code to be covered
+        target: 100%
+        threshold: 0%
+
+comment:
+  layout: "reach,diff,flags,tree"
+  behavior: default
+  require_changes: false
diff --git a/cypress/components/StyledMarkdown.cy.tsx b/cypress/components/StyledMarkdown.cy.tsx
new file mode 100644
index 000000000..d30710b07
--- /dev/null
+++ b/cypress/components/StyledMarkdown.cy.tsx
@@ -0,0 +1,109 @@
+import React from 'react';
+import StyledMarkdown from '~/components/StyledMarkdown';
+
+describe('StyledMarkdown - Reference Links', () => {
+  it('should correctly transform standard reference links', () => {
+    const markdown = `
+[JSON Schema][json-schema]
+
+[json-schema]: https://json-schema.org/
+`;
+    cy.mount(<StyledMarkdown markdown={markdown} />);
+    cy.get('a').should('have.attr', 'href', 'https://json-schema.org/');
+    cy.get('a').should('have.text', 'JSON Schema');
+  });
+
+  it('should correctly transform implicit reference links', () => {
+    const markdown = `
+[json-schema][]
+
+[json-schema]: https://json-schema.org/
+`;
+    cy.mount(<StyledMarkdown markdown={markdown} />);
+    cy.get('a').should('have.attr', 'href', 'https://json-schema.org/');
+    // For implicit links [json-schema][], the text is 'json-schema'
+    cy.get('a').should('have.text', 'json-schema');
+  });
+
+  it('should correctly transform collapsed reference links', () => {
+    const markdown = `
+[json-schema]
+
+[json-schema]: https://json-schema.org/
+`;
+    cy.mount(<StyledMarkdown markdown={markdown} />);
+    cy.get('a').should('have.attr', 'href', 'https://json-schema.org/');
+    cy.get('a').should('have.text', 'json-schema');
+  });
+
+  it('should correctly handle images as reference links', () => {
+    const markdown = `
+![JSON Schema Logo][logo]
+
+[logo]: https://json-schema.org/img/logo-blue.svg
+`;
+    cy.mount(<StyledMarkdown markdown={markdown} />);
+    cy.get('img').should(
+      'have.attr',
+      'src',
+      'https://json-schema.org/img/logo-blue.svg',
+    );
+    cy.get('img').should('have.attr', 'alt', 'JSON Schema Logo');
+  });
+
+  it('should not break standard inline links', () => {
+    const markdown = `
+[Inline Link](https://example.com)
+`;
+    cy.mount(<StyledMarkdown markdown={markdown} />);
+    cy.get('a').should('have.attr', 'href', 'https://example.com');
+    cy.get('a').should('have.text', 'Inline Link');
+  });
+
+  it('should handle reference links with an optional space', () => {
+    const markdown = `
+[JSON Schema] [json-schema]
+
+[json-schema]: https://json-schema.org/
+`;
+    cy.mount(<StyledMarkdown markdown={markdown} />);
+    cy.get('a').should('have.attr', 'href', 'https://json-schema.org/');
+    cy.get('a').should('have.text', 'JSON Schema');
+  });
+
+  it('should handle implicit reference links with an optional space', () => {
+    const markdown = `
+[json-schema] []
+
+[json-schema]: https://json-schema.org/
+`;
+    cy.mount(<StyledMarkdown markdown={markdown} />);
+    cy.get('a').should('have.attr', 'href', 'https://json-schema.org/');
+    cy.get('a').should('have.text', 'json-schema');
+  });
+
+  it('should prioritize the second bracket as the link ID', () => {
+    const markdown = `
+[Text][actual-id]
+
+[text]: https://wrong.com/
+[actual-id]: https://right.com/
+`;
+    cy.mount(<StyledMarkdown markdown={markdown} />);
+    cy.get('a').should('have.attr', 'href', 'https://right.com/');
+    cy.get('a').should('have.text', 'Text');
+  });
+
+  it('should ignore links without definitions', () => {
+    const markdown = `
+[Missing Definition]
+[Missing Implicit][]
+[Link][missing-id]
+`;
+    cy.mount(<StyledMarkdown markdown={markdown} />);
+    // These should NOT be transformed into anchor tags if they are just raw text now
+    // But since the regex returns the original string if no link is found,
+    // they will be rendered as plain text by the markdown parser.
+    cy.get('a').should('not.exist');
+  });
+});
diff --git a/lib/markdownUtils.ts b/lib/markdownUtils.ts
index b0d89691e..3f386a409 100644
--- a/lib/markdownUtils.ts
+++ b/lib/markdownUtils.ts
@@ -25,13 +25,14 @@ export function transformMarkdownLinks(markdown: string): string {
 
   // Replace reference-style links with inline links
   return markdown.replace(
-    /\[([^\]]+)\]\[([^\]]*)\]/g,
-    (_, text: string, id: string) => {
-      const link = linkDefinitions[id.toLowerCase()];
+    /!?\[([^\]]+)\](?:\s?\[([^\]]*)\])?(?!\()/g,
+    (match: string, text: string, id: string | undefined) => {
+      const linkId = (id !== undefined && id !== '' ? id : text).toLowerCase();
+      const link = linkDefinitions[linkId];
       if (link) {
-        return `[${text}](${link})`;
+        return (match.startsWith('!') ? '!' : '') + `[${text}](${link})`;
       }
-      return _; // Return the original string if no link is found
+      return match; // Return the original string if no link is found
     },
   );
 }