diff --git a/crates/node/src/sync.rs b/crates/node/src/sync.rs
index cf4f00c94..0fcf00401 100644
--- a/crates/node/src/sync.rs
+++ b/crates/node/src/sync.rs
@@ -16,7 +16,7 @@ use crate::types::{InitPayload, StreamMessage};
 use crate::Node;
 
 mod blobs;
-mod key_share;
+mod key;
 mod state;
 
 #[derive(Copy, Clone, Debug)]
@@ -227,7 +227,7 @@ impl Node {
                 )
                 .await?
             }
-            InitPayload::KeyShare {} => {
+            InitPayload::KeyShare => {
                 self.handle_key_share_request(context, their_identity, stream)
                     .await?
             }
diff --git a/crates/node/src/sync/blobs.rs b/crates/node/src/sync/blobs.rs
index 2ce868232..8e6803d5d 100644
--- a/crates/node/src/sync/blobs.rs
+++ b/crates/node/src/sync/blobs.rs
@@ -162,7 +162,7 @@ impl Node {
                 party_id: our_identity,
                 payload: InitPayload::BlobShare { blob_id },
             },
-            Some(shared_key),
+            None,
         )
         .await?;
 
diff --git a/crates/node/src/sync/key_share.rs b/crates/node/src/sync/key.rs
similarity index 68%
rename from crates/node/src/sync/key_share.rs
rename to crates/node/src/sync/key.rs
index d55e92d83..097893387 100644
--- a/crates/node/src/sync/key_share.rs
+++ b/crates/node/src/sync/key.rs
@@ -23,7 +23,7 @@ impl Node {
             &StreamMessage::Init {
                 context_id: context.id,
                 party_id: our_identity,
-                payload: InitPayload::KeyShare {},
+                payload: InitPayload::KeyShare,
             },
             None,
         )
@@ -33,15 +33,35 @@ impl Node {
             bail!("connection closed while awaiting state sync handshake");
         };
 
-        let (sender_key, their_identity) = match ack {
+        let their_identity = match ack {
+            StreamMessage::Init {
+                party_id,
+                payload: InitPayload::KeyShare,
+                ..
+            } => party_id,
+            unexpected @ (StreamMessage::Init { .. }
+            | StreamMessage::Message { .. }
+            | StreamMessage::OpaqueError) => {
+                bail!("unexpected message: {:?}", unexpected)
+            }
+        };
+
+        let private_key = self
+            .ctx_manager
+            .get_private_key(context.id, our_identity)?
+            .ok_or_eyre("expected own identity to have private key")?;
+
+        let shared_key = SharedKey::new(&private_key, &their_identity);
+
+        let Some(ack) = recv(stream, self.sync_config.timeout, Some(shared_key)).await? else {
+            bail!("connection closed while awaiting state sync handshake");
+        };
+
+        let sender_key = match ack {
             StreamMessage::Message {
-                payload:
-                    MessagePayload::KeyShare {
-                        sender_key,
-                        public_key: their_identity,
-                    },
+                payload: MessagePayload::KeyShare { sender_key },
                 ..
-            } => (sender_key, their_identity),
+            } => sender_key,
             unexpected @ (StreamMessage::Init { .. }
             | StreamMessage::Message { .. }
             | StreamMessage::OpaqueError) => {
@@ -90,6 +110,17 @@ impl Node {
             bail!("no identities found for context: {}", context.id);
         };
 
+        send(
+            stream,
+            &StreamMessage::Init {
+                context_id: context.id,
+                party_id: our_identity,
+                payload: InitPayload::KeyShare,
+            },
+            None,
+        )
+        .await?;
+
         let sender_key = self
             .ctx_manager
             .get_sender_key(&context.id, &our_identity)?
@@ -103,10 +134,7 @@ impl Node {
             stream,
             &StreamMessage::Message {
                 sequence_id: sequencer.next(),
-                payload: MessagePayload::KeyShare {
-                    sender_key,
-                    public_key: our_identity,
-                },
+                payload: MessagePayload::KeyShare { sender_key },
             },
             Some(shared_key), // or None?
         )
diff --git a/crates/node/src/sync/state.rs b/crates/node/src/sync/state.rs
index b176adf8d..4a989d684 100644
--- a/crates/node/src/sync/state.rs
+++ b/crates/node/src/sync/state.rs
@@ -144,8 +144,7 @@ impl Node {
                     application_id: context.application_id,
                 },
             },
-            None, // I think it should be None here,
-                  // because the first recv in the function above has to have some way of decrypting it?
+            None,
         )
         .await?;
 
diff --git a/crates/node/src/types.rs b/crates/node/src/types.rs
index 2fd7beeef..00649b15c 100644
--- a/crates/node/src/types.rs
+++ b/crates/node/src/types.rs
@@ -47,21 +47,14 @@ pub enum InitPayload {
         root_hash: Hash,
         application_id: ApplicationId,
     },
-    KeyShare {},
+    KeyShare,
 }
-// this I was encrypting
+
 #[derive(Debug, BorshSerialize, BorshDeserialize)]
 pub enum MessagePayload<'a> {
-    StateSync {
-        artifact: Cow<'a, [u8]>,
-    },
-    BlobShare {
-        chunk: Cow<'a, [u8]>,
-    },
-    KeyShare {
-        sender_key: PrivateKey,
-        public_key: PublicKey,
-    },
+    StateSync { artifact: Cow<'a, [u8]> },
+    BlobShare { chunk: Cow<'a, [u8]> },
+    KeyShare { sender_key: PrivateKey },
 }
 
 #[derive(Deserialize)]
diff --git a/file.patch b/file.patch
deleted file mode 100644
index 95e0fa137..000000000
--- a/file.patch
+++ /dev/null
@@ -1,36 +0,0 @@
-diff --git a/crates/node/src/interactive_cli.rs b/crates/node/src/interactive_cli.rs
-index 2d720da4..d8bddbbc 100644
---- a/crates/node/src/interactive_cli.rs
-+++ b/crates/node/src/interactive_cli.rs
-@@ -12,6 +12,7 @@ pub mod peers;
- pub mod state;
- pub mod store;
- 
-+use calimero_primitives::blobs::BlobId;
- use clap::{Parser, Subcommand};
- 
- use crate::Node;
-@@ -34,6 +35,7 @@ pub enum SubCommand {
-     Peers(peers::PeersCommand),
-     // Store(store::StoreCommand),
-     State(state::StateCommand),
-+    Connect,
- }
- 
- pub async fn handle_line(node: &mut Node, line: String) -> eyre::Result<()> {
-@@ -59,6 +61,14 @@ pub async fn handle_line(node: &mut Node, line: String) -> eyre::Result<()> {
-         SubCommand::Peers(peers) => peers.run(node.network_client.clone().into()).await?,
-         SubCommand::State(state) => state.run(node)?,
-         // SubCommand::Store(store) => store.run(node)?,
-+        SubCommand::Connect => {
-+            let addr =
-+            "/ip4/18.156.18.6/udp/4001/quic-v1/p2p/12D3KooWMgoF9xzyeKJHtRvrYwdomheRbHPELagWZwTLmXb6bCVC";
-+
-+            let res = node.network_client.dial(addr.parse()?).await;
-+
-+            dbg!(res);
-+        }
-     }
- 
-     Ok(())
- }
\ No newline at end of file