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+# Lamassu Server: Future Peer Authentication Implementation
+
+This document describes how to implement PostgreSQL peer authentication (Unix socket) for the lamassu-server module in the future.
+
+## Current Limitation
+
+The lamassu-server's `constants.js` builds the database URL from individual environment variables:
+
+```javascript
+const POSTGRES_USER = process.env.POSTGRES_USER
+const POSTGRES_PASSWORD = process.env.POSTGRES_PASSWORD
+const POSTGRES_HOST = process.env.POSTGRES_HOST
+const POSTGRES_PORT = process.env.POSTGRES_PORT
+const POSTGRES_DB = process.env.POSTGRES_DB
+
+const PSQL_URL = `postgres://${POSTGRES_USER}:${POSTGRES_PASSWORD}@${POSTGRES_HOST}:${POSTGRES_PORT}/${POSTGRES_DB}`
+```
+
+This means:
+- `DATABASE_URL` environment variable is **not supported**
+- Unix socket connections are **not possible** (setting `POSTGRES_HOST=/run/postgresql` produces invalid URL syntax)
+- Password authentication via TCP is **required**
+
+## Required Upstream Changes
+
+### 1. Modify `packages/server/lib/constants.js`
+
+Add support for `DATABASE_URL` environment variable:
+
+```javascript
+const POSTGRES_USER = process.env.POSTGRES_USER
+const POSTGRES_PASSWORD = process.env.POSTGRES_PASSWORD
+const POSTGRES_HOST = process.env.POSTGRES_HOST
+const POSTGRES_PORT = process.env.POSTGRES_PORT
+const POSTGRES_DB = process.env.POSTGRES_DB
+
+// Support DATABASE_URL for Unix socket connections (peer auth)
+const PSQL_URL = process.env.DATABASE_URL ||
+  `postgres://${POSTGRES_USER}:${POSTGRES_PASSWORD}@${POSTGRES_HOST}:${POSTGRES_PORT}/${POSTGRES_DB}`
+```
+
+### 2. Update nix-bitcoin module
+
+Once upstream supports `DATABASE_URL`, update `modules/lamassu-lnbits.nix`:
+
+#### Remove password secret
+
+```nix
+nix-bitcoin.secrets = {
+  lamassu-key.user = cfg.user;
+  lamassu-cert = {
+    user = cfg.user;
+    permissions = "444";
+  };
+  # Remove: lamassu-db-password
+};
+
+nix-bitcoin.generateSecretsCmds.lamassu = ''
+  makeCert lamassu '${nbLib.mkCertExtraAltNames cfg.certificate}'
+  # Remove: makePasswordSecret lamassu-db-password
+'';
+```
+
+#### Remove lamassu-postgres-setup service
+
+Delete the entire `systemd.services.lamassu-postgres-setup` block.
+
+#### Simplify PostgreSQL config
+
+```nix
+services.postgresql = {
+  enable = true;
+  package = pkgs.postgresql_15;
+  ensureDatabases = [ cfg.database.name ];
+  ensureUsers = [
+    {
+      name = cfg.database.user;
+      ensureDBOwnership = true;
+    }
+  ];
+  # No custom authentication needed - default peer auth works
+};
+```
+
+#### Update service wrapper scripts
+
+```nix
+lamassuEnv = pkgs.writeShellScript "lamassu-env" ''
+  #!/bin/bash
+  set -euo pipefail
+  export PATH=${pkgs.nodejs_22}/bin:$PATH
+  # Use Unix socket for peer authentication (no password needed)
+  export DATABASE_URL="postgresql://${cfg.database.user}@/${cfg.database.name}?host=/run/postgresql"
+  export NODE_PATH=${cfg.package}/node_modules:${cfg.package}/packages/server/node_modules
+  cd ${cfg.package}
+  exec "$@"
+'';
+```
+
+#### Remove password-related env vars
+
+Remove from service `environment` blocks:
+- `POSTGRES_HOST`
+- `POSTGRES_PORT`
+- `POSTGRES_PASSWORD`
+
+## Benefits of Peer Authentication
+
+1. **No password to manage** - No secrets generation, storage, or rotation
+2. **More secure** - Authentication handled by OS kernel, not application
+3. **Simpler module** - ~55 fewer lines of code
+4. **Consistent with btcpayserver** - Same pattern used by other nix-bitcoin modules
+
+## Architecture Comparison
+
+### Current (password auth via TCP)
+
+```
+┌─────────────────────────────────────────────────────────────┐
+│  lamassu-server                                             │
+│    └── connects to 127.0.0.1:5432 with password            │
+│                         │                                   │
+│                         ▼                                   │
+│  PostgreSQL (TCP)                                           │
+│    └── validates password via md5 auth                      │
+└─────────────────────────────────────────────────────────────┘
+
+Requires:
+  - lamassu-db-password secret
+  - lamassu-postgres-setup service
+  - POSTGRES_HOST, POSTGRES_PORT, POSTGRES_PASSWORD env vars
+```
+
+### Future (peer auth via Unix socket)
+
+```
+┌─────────────────────────────────────────────────────────────┐
+│  lamassu-server (runs as user: lamassu-server)              │
+│    └── connects to /run/postgresql socket                   │
+│                         │                                   │
+│                         ▼                                   │
+│  PostgreSQL (Unix socket)                                   │
+│    └── validates OS user matches DB user (peer auth)        │
+└─────────────────────────────────────────────────────────────┘
+
+Requires:
+  - Nothing extra! Default NixOS PostgreSQL config works.
+```
+
+## DATABASE_URL Format for Unix Socket
+
+The node-postgres library supports Unix sockets via the `host` query parameter:
+
+```
+postgresql://username@/database?host=/run/postgresql
+```
+
+Components:
+- `username` - PostgreSQL user (must match OS user for peer auth)
+- `database` - Database name
+- `host=/run/postgresql` - Path to Unix socket directory
+
+## Reference
+
+- btcpayserver module uses peer auth: `postgres=User ID=btcpayserver;Host=/run/postgresql;Database=btcpaydb`
+- node-postgres Unix socket docs: https://node-postgres.com/features/connecting
+- pg-promise (used by lamassu): https://github.com/vitaly-t/pg-promise