diff --git a/app/Livewire/Project/Shared/EnvironmentVariable/All.php b/app/Livewire/Project/Shared/EnvironmentVariable/All.php
index 12a4cae79..b360798ff 100644
--- a/app/Livewire/Project/Shared/EnvironmentVariable/All.php
+++ b/app/Livewire/Project/Shared/EnvironmentVariable/All.php
@@ -79,6 +79,62 @@ public function getEnvironmentVariablesPreviewProperty()
         return $this->resource->environment_variables_preview;
     }
 
+    public function getHardcodedEnvironmentVariablesProperty()
+    {
+        return $this->getHardcodedVariables(false);
+    }
+
+    public function getHardcodedEnvironmentVariablesPreviewProperty()
+    {
+        return $this->getHardcodedVariables(true);
+    }
+
+    protected function getHardcodedVariables(bool $isPreview)
+    {
+        // Only for services and docker-compose applications
+        if ($this->resource->type() !== 'service' &&
+            ($this->resourceClass !== 'App\Models\Application' ||
+             ($this->resourceClass === 'App\Models\Application' && $this->resource->build_pack !== 'dockercompose'))) {
+            return collect([]);
+        }
+
+        $dockerComposeRaw = $this->resource->docker_compose_raw ?? $this->resource->docker_compose;
+
+        if (blank($dockerComposeRaw)) {
+            return collect([]);
+        }
+
+        // Extract all hard-coded variables
+        $hardcodedVars = extractHardcodedEnvironmentVariables($dockerComposeRaw);
+
+        // Filter out magic variables (SERVICE_FQDN_*, SERVICE_URL_*, SERVICE_NAME_*)
+        $hardcodedVars = $hardcodedVars->filter(function ($var) {
+            $key = $var['key'];
+
+            return ! str($key)->startsWith(['SERVICE_FQDN_', 'SERVICE_URL_', 'SERVICE_NAME_']);
+        });
+
+        // Filter out variables that exist in database (user has overridden/managed them)
+        // For preview, check against preview variables; for production, check against production variables
+        if ($isPreview) {
+            $managedKeys = $this->resource->environment_variables_preview()->pluck('key')->toArray();
+        } else {
+            $managedKeys = $this->resource->environment_variables()->where('is_preview', false)->pluck('key')->toArray();
+        }
+
+        $hardcodedVars = $hardcodedVars->filter(function ($var) use ($managedKeys) {
+            return ! in_array($var['key'], $managedKeys);
+        });
+
+        // Apply sorting based on is_env_sorting_enabled
+        if ($this->is_env_sorting_enabled) {
+            $hardcodedVars = $hardcodedVars->sortBy('key')->values();
+        }
+        // Otherwise keep order from docker-compose file
+
+        return $hardcodedVars;
+    }
+
     public function getDevView()
     {
         $this->variables = $this->formatEnvironmentVariables($this->environmentVariables);
diff --git a/app/Livewire/Project/Shared/EnvironmentVariable/ShowHardcoded.php b/app/Livewire/Project/Shared/EnvironmentVariable/ShowHardcoded.php
new file mode 100644
index 000000000..3a49ce124
--- /dev/null
+++ b/app/Livewire/Project/Shared/EnvironmentVariable/ShowHardcoded.php
@@ -0,0 +1,31 @@
+<?php
+
+namespace App\Livewire\Project\Shared\EnvironmentVariable;
+
+use Livewire\Component;
+
+class ShowHardcoded extends Component
+{
+    public array $env;
+
+    public string $key;
+
+    public ?string $value = null;
+
+    public ?string $comment = null;
+
+    public ?string $serviceName = null;
+
+    public function mount()
+    {
+        $this->key = $this->env['key'];
+        $this->value = $this->env['value'] ?? null;
+        $this->comment = $this->env['comment'] ?? null;
+        $this->serviceName = $this->env['service_name'] ?? null;
+    }
+
+    public function render()
+    {
+        return view('livewire.project.shared.environment-variable.show-hardcoded');
+    }
+}
diff --git a/bootstrap/helpers/parsers.php b/bootstrap/helpers/parsers.php
index 3f942547f..5112e3abd 100644
--- a/bootstrap/helpers/parsers.php
+++ b/bootstrap/helpers/parsers.php
@@ -998,53 +998,139 @@ function applicationParser(Application $resource, int $pull_request_id = 0, ?int
             } else {
                 if ($value->startsWith('$')) {
                     $isRequired = false;
-                    if ($value->contains(':-')) {
-                        $value = replaceVariables($value);
-                        $key = $value->before(':');
-                        $value = $value->after(':-');
-                    } elseif ($value->contains('-')) {
-                        $value = replaceVariables($value);
 
-                        $key = $value->before('-');
-                        $value = $value->after('-');
-                    } elseif ($value->contains(':?')) {
-                        $value = replaceVariables($value);
+                    // Extract variable content between ${...} using balanced brace matching
+                    $result = extractBalancedBraceContent($value->value(), 0);
 
-                        $key = $value->before(':');
-                        $value = $value->after(':?');
-                        $isRequired = true;
-                    } elseif ($value->contains('?')) {
-                        $value = replaceVariables($value);
+                    if ($result !== null) {
+                        $content = $result['content'];
+                        $split = splitOnOperatorOutsideNested($content);
 
-                        $key = $value->before('?');
-                        $value = $value->after('?');
-                        $isRequired = true;
-                    }
-                    if ($originalValue->value() === $value->value()) {
-                        // This means the variable does not have a default value, so it needs to be created in Coolify
-                        $parsedKeyValue = replaceVariables($value);
+                        if ($split !== null) {
+                            // Has default value syntax (:-,  -,  :?, or ?)
+                            $varName = $split['variable'];
+                            $operator = $split['operator'];
+                            $defaultValue = $split['default'];
+                            $isRequired = str_contains($operator, '?');
+
+                            // Create the primary variable with its default (only if it doesn't exist)
+                            $envVar = $resource->environment_variables()->firstOrCreate([
+                                'key' => $varName,
+                                'resourceable_type' => get_class($resource),
+                                'resourceable_id' => $resource->id,
+                            ], [
+                                'value' => $defaultValue,
+                                'is_preview' => false,
+                                'is_required' => $isRequired,
+                            ]);
+
+                            // Add the variable to the environment so it will be shown in the deployable compose file
+                            $environment[$varName] = $envVar->value;
+
+                            // Recursively process nested variables in default value
+                            if (str_contains($defaultValue, '${')) {
+                                $searchPos = 0;
+                                $nestedResult = extractBalancedBraceContent($defaultValue, $searchPos);
+                                while ($nestedResult !== null) {
+                                    $nestedContent = $nestedResult['content'];
+                                    $nestedSplit = splitOnOperatorOutsideNested($nestedContent);
+
+                                    // Determine the nested variable name
+                                    $nestedVarName = $nestedSplit !== null ? $nestedSplit['variable'] : $nestedContent;
+
+                                    // Skip SERVICE_URL_* and SERVICE_FQDN_* variables - they are handled by magic variable system
+                                    $isMagicVariable = str_starts_with($nestedVarName, 'SERVICE_URL_') || str_starts_with($nestedVarName, 'SERVICE_FQDN_');
+
+                                    if (! $isMagicVariable) {
+                                        if ($nestedSplit !== null) {
+                                            $nestedEnvVar = $resource->environment_variables()->firstOrCreate([
+                                                'key' => $nestedSplit['variable'],
+                                                'resourceable_type' => get_class($resource),
+                                                'resourceable_id' => $resource->id,
+                                            ], [
+                                                'value' => $nestedSplit['default'],
+                                                'is_preview' => false,
+                                            ]);
+                                            $environment[$nestedSplit['variable']] = $nestedEnvVar->value;
+                                        } else {
+                                            $nestedEnvVar = $resource->environment_variables()->firstOrCreate([
+                                                'key' => $nestedContent,
+                                                'resourceable_type' => get_class($resource),
+                                                'resourceable_id' => $resource->id,
+                                            ], [
+                                                'is_preview' => false,
+                                            ]);
+                                            $environment[$nestedContent] = $nestedEnvVar->value;
+                                        }
+                                    }
+
+                                    $searchPos = $nestedResult['end'] + 1;
+                                    if ($searchPos >= strlen($defaultValue)) {
+                                        break;
+                                    }
+                                    $nestedResult = extractBalancedBraceContent($defaultValue, $searchPos);
+                                }
+                            }
+                        } else {
+                            // Simple variable reference without default
+                            $parsedKeyValue = replaceVariables($value);
+                            $resource->environment_variables()->firstOrCreate([
+                                'key' => $content,
+                                'resourceable_type' => get_class($resource),
+                                'resourceable_id' => $resource->id,
+                            ], [
+                                'is_preview' => false,
+                                'is_required' => $isRequired,
+                            ]);
+                            // Add the variable to the environment
+                            $environment[$content] = $value;
+                        }
+                    } else {
+                        // Fallback to old behavior for malformed input (backward compatibility)
+                        if ($value->contains(':-')) {
+                            $value = replaceVariables($value);
+                            $key = $value->before(':');
+                            $value = $value->after(':-');
+                        } elseif ($value->contains('-')) {
+                            $value = replaceVariables($value);
+                            $key = $value->before('-');
+                            $value = $value->after('-');
+                        } elseif ($value->contains(':?')) {
+                            $value = replaceVariables($value);
+                            $key = $value->before(':');
+                            $value = $value->after(':?');
+                            $isRequired = true;
+                        } elseif ($value->contains('?')) {
+                            $value = replaceVariables($value);
+                            $key = $value->before('?');
+                            $value = $value->after('?');
+                            $isRequired = true;
+                        }
+                        if ($originalValue->value() === $value->value()) {
+                            // This means the variable does not have a default value
+                            $parsedKeyValue = replaceVariables($value);
+                            $resource->environment_variables()->firstOrCreate([
+                                'key' => $parsedKeyValue,
+                                'resourceable_type' => get_class($resource),
+                                'resourceable_id' => $resource->id,
+                            ], [
+                                'is_preview' => false,
+                                'is_required' => $isRequired,
+                            ]);
+                            $environment[$parsedKeyValue->value()] = $value;
+
+                            continue;
+                        }
                         $resource->environment_variables()->firstOrCreate([
-                            'key' => $parsedKeyValue,
+                            'key' => $key,
                             'resourceable_type' => get_class($resource),
                             'resourceable_id' => $resource->id,
                         ], [
+                            'value' => $value,
                             'is_preview' => false,
                             'is_required' => $isRequired,
                         ]);
-                        // Add the variable to the environment so it will be shown in the deployable compose file
-                        $environment[$parsedKeyValue->value()] = $value;
-
-                        continue;
                     }
-                    $resource->environment_variables()->firstOrCreate([
-                        'key' => $key,
-                        'resourceable_type' => get_class($resource),
-                        'resourceable_id' => $resource->id,
-                    ], [
-                        'value' => $value,
-                        'is_preview' => false,
-                        'is_required' => $isRequired,
-                    ]);
                 }
             }
         }
@@ -1774,6 +1860,7 @@ function serviceParser(Service $resource): Collection
                         $serviceExists->fqdn = $url;
                         $serviceExists->save();
                     }
+                    // Create FQDN variable
                     $resource->environment_variables()->updateOrCreate([
                         'key' => $key->value(),
                         'resourceable_type' => get_class($resource),
@@ -1784,9 +1871,22 @@ function serviceParser(Service $resource): Collection
                         'comment' => $envComments[$originalMagicKey] ?? null,
                     ]);
 
+                    // Also create the paired SERVICE_URL_* variable
+                    $urlKey = 'SERVICE_URL_'.strtoupper($fqdnFor);
+                    $resource->environment_variables()->updateOrCreate([
+                        'key' => $urlKey,
+                        'resourceable_type' => get_class($resource),
+                        'resourceable_id' => $resource->id,
+                    ], [
+                        'value' => $url,
+                        'is_preview' => false,
+                        'comment' => $envComments[$urlKey] ?? null,
+                    ]);
+
                 } elseif ($command->value() === 'URL') {
                     $urlFor = $key->after('SERVICE_URL_')->lower()->value();
                     $url = generateUrl(server: $server, random: str($urlFor)->replace('_', '-')->value()."-$uuid");
+                    $fqdn = generateFqdn(server: $server, random: str($urlFor)->replace('_', '-')->value()."-$uuid", parserVersion: $resource->compose_parsing_version);
 
                     $envExists = $resource->environment_variables()->where('key', $key->value())->first();
                     // Also check if a port-suffixed version exists (e.g., SERVICE_URL_DASHBOARD_6791)
@@ -1803,6 +1903,7 @@ function serviceParser(Service $resource): Collection
                         $serviceExists->fqdn = $url;
                         $serviceExists->save();
                     }
+                    // Create URL variable
                     $resource->environment_variables()->updateOrCreate([
                         'key' => $key->value(),
                         'resourceable_type' => get_class($resource),
@@ -1813,6 +1914,18 @@ function serviceParser(Service $resource): Collection
                         'comment' => $envComments[$originalMagicKey] ?? null,
                     ]);
 
+                    // Also create the paired SERVICE_FQDN_* variable
+                    $fqdnKey = 'SERVICE_FQDN_'.strtoupper($urlFor);
+                    $resource->environment_variables()->updateOrCreate([
+                        'key' => $fqdnKey,
+                        'resourceable_type' => get_class($resource),
+                        'resourceable_id' => $resource->id,
+                    ], [
+                        'value' => $fqdn,
+                        'is_preview' => false,
+                        'comment' => $envComments[$fqdnKey] ?? null,
+                    ]);
+
                 } else {
                     $value = generateEnvValue($command, $resource);
                     $resource->environment_variables()->updateOrCreate([
@@ -2213,55 +2326,149 @@ function serviceParser(Service $resource): Collection
             } else {
                 if ($value->startsWith('$')) {
                     $isRequired = false;
-                    if ($value->contains(':-')) {
-                        $value = replaceVariables($value);
-                        $key = $value->before(':');
-                        $value = $value->after(':-');
-                    } elseif ($value->contains('-')) {
-                        $value = replaceVariables($value);
 
-                        $key = $value->before('-');
-                        $value = $value->after('-');
-                    } elseif ($value->contains(':?')) {
-                        $value = replaceVariables($value);
+                    // Extract variable content between ${...} using balanced brace matching
+                    $result = extractBalancedBraceContent($value->value(), 0);
 
-                        $key = $value->before(':');
-                        $value = $value->after(':?');
-                        $isRequired = true;
-                    } elseif ($value->contains('?')) {
-                        $value = replaceVariables($value);
+                    if ($result !== null) {
+                        $content = $result['content'];
+                        $split = splitOnOperatorOutsideNested($content);
 
-                        $key = $value->before('?');
-                        $value = $value->after('?');
-                        $isRequired = true;
-                    }
-                    if ($originalValue->value() === $value->value()) {
-                        // This means the variable does not have a default value, so it needs to be created in Coolify
-                        $parsedKeyValue = replaceVariables($value);
+                        if ($split !== null) {
+                            // Has default value syntax (:-,  -,  :?, or ?)
+                            $varName = $split['variable'];
+                            $operator = $split['operator'];
+                            $defaultValue = $split['default'];
+                            $isRequired = str_contains($operator, '?');
+
+                            // Create the primary variable with its default (only if it doesn't exist)
+                            // Use firstOrCreate instead of updateOrCreate to avoid overwriting user edits
+                            $envVar = $resource->environment_variables()->firstOrCreate([
+                                'key' => $varName,
+                                'resourceable_type' => get_class($resource),
+                                'resourceable_id' => $resource->id,
+                            ], [
+                                'value' => $defaultValue,
+                                'is_preview' => false,
+                                'is_required' => $isRequired,
+                                'comment' => $envComments[$originalKey] ?? null,
+                            ]);
+
+                            // Add the variable to the environment so it will be shown in the deployable compose file
+                            $environment[$varName] = $envVar->value;
+
+                            // Recursively process nested variables in default value
+                            if (str_contains($defaultValue, '${')) {
+                                // Extract and create nested variables
+                                $searchPos = 0;
+                                $nestedResult = extractBalancedBraceContent($defaultValue, $searchPos);
+                                while ($nestedResult !== null) {
+                                    $nestedContent = $nestedResult['content'];
+                                    $nestedSplit = splitOnOperatorOutsideNested($nestedContent);
+
+                                    // Determine the nested variable name
+                                    $nestedVarName = $nestedSplit !== null ? $nestedSplit['variable'] : $nestedContent;
+
+                                    // Skip SERVICE_URL_* and SERVICE_FQDN_* variables - they are handled by magic variable system
+                                    $isMagicVariable = str_starts_with($nestedVarName, 'SERVICE_URL_') || str_starts_with($nestedVarName, 'SERVICE_FQDN_');
+
+                                    if (! $isMagicVariable) {
+                                        if ($nestedSplit !== null) {
+                                            // Create nested variable with its default (only if it doesn't exist)
+                                            $nestedEnvVar = $resource->environment_variables()->firstOrCreate([
+                                                'key' => $nestedSplit['variable'],
+                                                'resourceable_type' => get_class($resource),
+                                                'resourceable_id' => $resource->id,
+                                            ], [
+                                                'value' => $nestedSplit['default'],
+                                                'is_preview' => false,
+                                            ]);
+                                            // Add nested variable to environment
+                                            $environment[$nestedSplit['variable']] = $nestedEnvVar->value;
+                                        } else {
+                                            // Simple nested variable without default (only if it doesn't exist)
+                                            $nestedEnvVar = $resource->environment_variables()->firstOrCreate([
+                                                'key' => $nestedContent,
+                                                'resourceable_type' => get_class($resource),
+                                                'resourceable_id' => $resource->id,
+                                            ], [
+                                                'is_preview' => false,
+                                            ]);
+                                            // Add nested variable to environment
+                                            $environment[$nestedContent] = $nestedEnvVar->value;
+                                        }
+                                    }
+
+                                    // Look for more nested variables
+                                    $searchPos = $nestedResult['end'] + 1;
+                                    if ($searchPos >= strlen($defaultValue)) {
+                                        break;
+                                    }
+                                    $nestedResult = extractBalancedBraceContent($defaultValue, $searchPos);
+                                }
+                            }
+                        } else {
+                            // Simple variable reference without default
+                            $resource->environment_variables()->updateOrCreate([
+                                'key' => $content,
+                                'resourceable_type' => get_class($resource),
+                                'resourceable_id' => $resource->id,
+                            ], [
+                                'is_preview' => false,
+                                'is_required' => $isRequired,
+                                'comment' => $envComments[$originalKey] ?? null,
+                            ]);
+                        }
+                    } else {
+                        // Fallback to old behavior for malformed input (backward compatibility)
+                        if ($value->contains(':-')) {
+                            $value = replaceVariables($value);
+                            $key = $value->before(':');
+                            $value = $value->after(':-');
+                        } elseif ($value->contains('-')) {
+                            $value = replaceVariables($value);
+                            $key = $value->before('-');
+                            $value = $value->after('-');
+                        } elseif ($value->contains(':?')) {
+                            $value = replaceVariables($value);
+                            $key = $value->before(':');
+                            $value = $value->after(':?');
+                            $isRequired = true;
+                        } elseif ($value->contains('?')) {
+                            $value = replaceVariables($value);
+                            $key = $value->before('?');
+                            $value = $value->after('?');
+                            $isRequired = true;
+                        }
+
+                        if ($originalValue->value() === $value->value()) {
+                            // This means the variable does not have a default value
+                            $parsedKeyValue = replaceVariables($value);
+                            $resource->environment_variables()->updateOrCreate([
+                                'key' => $parsedKeyValue,
+                                'resourceable_type' => get_class($resource),
+                                'resourceable_id' => $resource->id,
+                            ], [
+                                'is_preview' => false,
+                                'is_required' => $isRequired,
+                                'comment' => $envComments[$originalKey] ?? null,
+                            ]);
+                            // Add the variable to the environment so it will be shown in the deployable compose file
+                            $environment[$parsedKeyValue->value()] = $value;
+
+                            continue;
+                        }
                         $resource->environment_variables()->updateOrCreate([
-                            'key' => $parsedKeyValue,
+                            'key' => $key,
                             'resourceable_type' => get_class($resource),
                             'resourceable_id' => $resource->id,
                         ], [
+                            'value' => $value,
                             'is_preview' => false,
                             'is_required' => $isRequired,
                             'comment' => $envComments[$originalKey] ?? null,
                         ]);
-                        // Add the variable to the environment so it will be shown in the deployable compose file
-                        $environment[$parsedKeyValue->value()] = $value;
-
-                        continue;
                     }
-                    $resource->environment_variables()->updateOrCreate([
-                        'key' => $key,
-                        'resourceable_type' => get_class($resource),
-                        'resourceable_id' => $resource->id,
-                    ], [
-                        'value' => $value,
-                        'is_preview' => false,
-                        'is_required' => $isRequired,
-                        'comment' => $envComments[$originalKey] ?? null,
-                    ]);
                 }
             }
         }
diff --git a/bootstrap/helpers/services.php b/bootstrap/helpers/services.php
index 3d2b61b86..64ec282f5 100644
--- a/bootstrap/helpers/services.php
+++ b/bootstrap/helpers/services.php
@@ -17,9 +17,115 @@ function collectRegex(string $name)
 {
     return "/{$name}\w+/";
 }
+
+/**
+ * Extract content between balanced braces, handling nested braces properly.
+ *
+ * @param  string  $str  The string to search
+ * @param  int  $startPos  Position to start searching from
+ * @return array|null Array with 'content', 'start', and 'end' keys, or null if no balanced braces found
+ */
+function extractBalancedBraceContent(string $str, int $startPos = 0): ?array
+{
+    // Find opening brace
+    $openPos = strpos($str, '{', $startPos);
+    if ($openPos === false) {
+        return null;
+    }
+
+    // Track depth to find matching closing brace
+    $depth = 1;
+    $pos = $openPos + 1;
+    $len = strlen($str);
+
+    while ($pos < $len && $depth > 0) {
+        if ($str[$pos] === '{') {
+            $depth++;
+        } elseif ($str[$pos] === '}') {
+            $depth--;
+        }
+        $pos++;
+    }
+
+    if ($depth !== 0) {
+        // Unbalanced braces
+        return null;
+    }
+
+    return [
+        'content' => substr($str, $openPos + 1, $pos - $openPos - 2),
+        'start' => $openPos,
+        'end' => $pos - 1,
+    ];
+}
+
+/**
+ * Split variable expression on operators (:-,  -,  :?,  ?) while respecting nested braces.
+ *
+ * @param  string  $content  The content to split (without outer ${...})
+ * @return array|null Array with 'variable', 'operator', and 'default' keys, or null if no operator found
+ */
+function splitOnOperatorOutsideNested(string $content): ?array
+{
+    $operators = [':-', '-', ':?', '?'];
+    $depth = 0;
+    $len = strlen($content);
+
+    for ($i = 0; $i < $len; $i++) {
+        if ($content[$i] === '{') {
+            $depth++;
+        } elseif ($content[$i] === '}') {
+            $depth--;
+        } elseif ($depth === 0) {
+            // Check for operators only at depth 0 (outside nested braces)
+            foreach ($operators as $op) {
+                if (substr($content, $i, strlen($op)) === $op) {
+                    return [
+                        'variable' => substr($content, 0, $i),
+                        'operator' => $op,
+                        'default' => substr($content, $i + strlen($op)),
+                    ];
+                }
+            }
+        }
+    }
+
+    return null;
+}
+
 function replaceVariables(string $variable): Stringable
 {
-    return str($variable)->before('}')->replaceFirst('$', '')->replaceFirst('{', '');
+    // Handle ${VAR} syntax with proper brace matching
+    $str = str($variable);
+
+    // Handle ${VAR} format
+    if ($str->startsWith('${')) {
+        $result = extractBalancedBraceContent($variable, 0);
+        if ($result !== null) {
+            return str($result['content']);
+        }
+
+        // Fallback to old behavior for malformed input
+        return $str->before('}')->replaceFirst('$', '')->replaceFirst('{', '');
+    }
+
+    // Handle {VAR} format (from regex capture group without $)
+    if ($str->startsWith('{') && $str->endsWith('}')) {
+        return str(substr($variable, 1, -1));
+    }
+
+    // Handle {VAR format (from regex capture group, may be truncated)
+    if ($str->startsWith('{')) {
+        $result = extractBalancedBraceContent('$'.$variable, 0);
+        if ($result !== null) {
+            return str($result['content']);
+        }
+
+        // Fallback: remove { and get content before }
+        return $str->replaceFirst('{', '')->before('}');
+    }
+
+    return $str;
 }
 
 function getFilesystemVolumesFromServer(ServiceApplication|ServiceDatabase|Application $oneService, bool $isInit = false)
diff --git a/bootstrap/helpers/shared.php b/bootstrap/helpers/shared.php
index f2f29bdc6..0437aaa70 100644
--- a/bootstrap/helpers/shared.php
+++ b/bootstrap/helpers/shared.php
@@ -3692,3 +3692,55 @@ function verifyPasswordConfirmation(mixed $password, ?Livewire\Component $compon
 
     return true;
 }
+
+/**
+ * Extract hard-coded environment variables from docker-compose YAML.
+ *
+ * @param  string  $dockerComposeRaw  Raw YAML content
+ * @return \Illuminate\Support\Collection Collection of arrays with: key, value, comment, service_name
+ */
+function extractHardcodedEnvironmentVariables(string $dockerComposeRaw): \Illuminate\Support\Collection
+{
+    if (blank($dockerComposeRaw)) {
+        return collect([]);
+    }
+
+    try {
+        $yaml = \Symfony\Component\Yaml\Yaml::parse($dockerComposeRaw);
+    } catch (\Exception $e) {
+        // Malformed YAML - return empty collection
+        return collect([]);
+    }
+
+    $services = data_get($yaml, 'services', []);
+    if (empty($services)) {
+        return collect([]);
+    }
+
+    // Extract inline comments from raw YAML
+    $envComments = extractYamlEnvironmentComments($dockerComposeRaw);
+
+    $hardcodedVars = collect([]);
+
+    foreach ($services as $serviceName => $service) {
+        $environment = collect(data_get($service, 'environment', []));
+
+        if ($environment->isEmpty()) {
+            continue;
+        }
+
+        // Convert environment variables to key-value format
+        $environment = convertToKeyValueCollection($environment);
+
+        foreach ($environment as $key => $value) {
+            $hardcodedVars->push([
+                'key' => $key,
+                'value' => $value,
+                'comment' => $envComments[$key] ?? null,
+                'service_name' => $serviceName,
+            ]);
+        }
+    }
+
+    return $hardcodedVars;
+}
diff --git a/resources/views/livewire/project/shared/environment-variable/all.blade.php b/resources/views/livewire/project/shared/environment-variable/all.blade.php
index f1d108703..a962b2cec 100644
--- a/resources/views/livewire/project/shared/environment-variable/all.blade.php
+++ b/resources/views/livewire/project/shared/environment-variable/all.blade.php
@@ -41,19 +41,6 @@
                 </div>
             </div>
         @endif
-        @if ($resource->type() === 'service' || $resource?->build_pack === 'dockercompose')
-            <div class="flex items-center gap-1 pt-4 dark:text-warning text-coollabs">
-                <svg class="hidden w-4 h-4 dark:text-warning lg:block" viewBox="0 0 256 256"
-                    xmlns="http://www.w3.org/2000/svg">
-                    <path fill="currentColor"
-                        d="M240.26 186.1L152.81 34.23a28.74 28.74 0 0 0-49.62 0L15.74 186.1a27.45 27.45 0 0 0 0 27.71A28.31 28.31 0 0 0 40.55 228h174.9a28.31 28.31 0 0 0 24.79-14.19a27.45 27.45 0 0 0 .02-27.71m-20.8 15.7a4.46 4.46 0 0 1-4 2.2H40.55a4.46 4.46 0 0 1-4-2.2a3.56 3.56 0 0 1 0-3.73L124 46.2a4.77 4.77 0 0 1 8 0l87.44 151.87a3.56 3.56 0 0 1 .02 3.73M116 136v-32a12 12 0 0 1 24 0v32a12 12 0 0 1-24 0m28 40a16 16 0 1 1-16-16a16 16 0 0 1 16 16">
-                    </path>
-                </svg>
-                Hardcoded variables are not shown here.
-            </div>
-            {{-- <div class="pb-4 dark:text-warning text-coollabs">If you would like to add a variable, you must add it to
-                your compose file.</div> --}}
-        @endif
     </div>
     @if ($view === 'normal')
         <div>
@@ -66,6 +53,13 @@
         @empty
             <div>No environment variables found.</div>
         @endforelse
+        @if (($resource->type() === 'service' || $resource?->build_pack === 'dockercompose') && $this->hardcodedEnvironmentVariables->isNotEmpty())
+            @foreach ($this->hardcodedEnvironmentVariables as $index => $env)
+                <livewire:project.shared.environment-variable.show-hardcoded
+                    wire:key="hardcoded-prod-{{ $env['key'] }}-{{ $env['service_name'] ?? 'default' }}-{{ $index }}"
+                    :env="$env" />
+            @endforeach
+        @endif
         @if ($resource->type() === 'application' && $resource->environment_variables_preview->count() > 0 && $showPreview)
             <div>
                 <h3>Preview Deployments Environment Variables</h3>
@@ -75,6 +69,13 @@
                 <livewire:project.shared.environment-variable.show wire:key="environment-{{ $env->id }}" :env="$env"
                     :type="$resource->type()" />
             @endforeach
+            @if (($resource->type() === 'service' || $resource?->build_pack === 'dockercompose') && $this->hardcodedEnvironmentVariablesPreview->isNotEmpty())
+                @foreach ($this->hardcodedEnvironmentVariablesPreview as $index => $env)
+                    <livewire:project.shared.environment-variable.show-hardcoded
+                        wire:key="hardcoded-preview-{{ $env['key'] }}-{{ $env['service_name'] ?? 'default' }}-{{ $index }}"
+                        :env="$env" />
+                @endforeach
+            @endif
         @endif
     @else
         <form wire:submit.prevent='submit' class="flex flex-col gap-2">
diff --git a/resources/views/livewire/project/shared/environment-variable/show-hardcoded.blade.php b/resources/views/livewire/project/shared/environment-variable/show-hardcoded.blade.php
new file mode 100644
index 000000000..9158d127e
--- /dev/null
+++ b/resources/views/livewire/project/shared/environment-variable/show-hardcoded.blade.php
@@ -0,0 +1,31 @@
+<div>
+    <div
+        class="flex flex-col items-center gap-4 p-4 bg-white border lg:items-start dark:bg-base dark:border-coolgray-300 border-neutral-200">
+        <div class="flex flex-wrap items-center gap-2">
+            <span
+                class="px-2 py-0.5 text-xs font-normal rounded dark:bg-coolgray-400/50 bg-neutral-200 dark:text-neutral-400 text-neutral-600">
+                Hardcoded env
+            </span>
+            @if($serviceName)
+                <span
+                    class="px-2 py-0.5 text-xs font-normal rounded dark:bg-coolgray-400/50 bg-neutral-200 dark:text-neutral-400 text-neutral-600">
+                    Service: {{ $serviceName }}
+                </span>
+            @endif
+        </div>
+        <div class="flex flex-col w-full gap-2">
+            <div class="flex flex-col w-full gap-2 lg:flex-row">
+                <x-forms.input disabled id="key" />
+                @if($value !== null && $value !== '')
+                    <x-forms.input disabled type="password" value="{{ $value }}" />
+                @else
+                    <x-forms.input disabled value="(inherited from host)" />
+                @endif
+            </div>
+            @if($comment)
+                <x-forms.input disabled value="{{ $comment }}" label="Comment"
+                    helper="Documentation for this environment variable." />
+            @endif
+        </div>
+    </div>
+</div>
\ No newline at end of file
diff --git a/tests/Unit/ExtractHardcodedEnvironmentVariablesTest.php b/tests/Unit/ExtractHardcodedEnvironmentVariablesTest.php
new file mode 100644
index 000000000..8d8caacaf
--- /dev/null
+++ b/tests/Unit/ExtractHardcodedEnvironmentVariablesTest.php
@@ -0,0 +1,147 @@
+<?php
+
+test('extracts simple environment variables from docker-compose', function () {
+    $yaml = <<<'YAML'
+services:
+  app:
+    image: nginx
+    environment:
+      - NODE_ENV=production
+      - PORT=3000
+YAML;
+
+    $result = extractHardcodedEnvironmentVariables($yaml);
+
+    expect($result)->toHaveCount(2)
+        ->and($result[0]['key'])->toBe('NODE_ENV')
+        ->and($result[0]['value'])->toBe('production')
+        ->and($result[0]['service_name'])->toBe('app')
+        ->and($result[1]['key'])->toBe('PORT')
+        ->and($result[1]['value'])->toBe('3000')
+        ->and($result[1]['service_name'])->toBe('app');
+});
+
+test('extracts environment variables with inline comments', function () {
+    $yaml = <<<'YAML'
+services:
+  app:
+    environment:
+      - NODE_ENV=production  # Production environment
+      - DEBUG=false  # Disable debug mode
+YAML;
+
+    $result = extractHardcodedEnvironmentVariables($yaml);
+
+    expect($result)->toHaveCount(2)
+        ->and($result[0]['comment'])->toBe('Production environment')
+        ->and($result[1]['comment'])->toBe('Disable debug mode');
+});
+
+test('handles multiple services', function () {
+    $yaml = <<<'YAML'
+services:
+  app:
+    environment:
+      - APP_ENV=prod
+  db:
+    environment:
+      - POSTGRES_DB=mydb
+YAML;
+
+    $result = extractHardcodedEnvironmentVariables($yaml);
+
+    expect($result)->toHaveCount(2)
+        ->and($result[0]['key'])->toBe('APP_ENV')
+        ->and($result[0]['service_name'])->toBe('app')
+        ->and($result[1]['key'])->toBe('POSTGRES_DB')
+        ->and($result[1]['service_name'])->toBe('db');
+});
+
+test('handles associative array format', function () {
+    $yaml = <<<'YAML'
+services:
+  app:
+    environment:
+      NODE_ENV: production
+      PORT: 3000
+YAML;
+
+    $result = extractHardcodedEnvironmentVariables($yaml);
+
+    expect($result)->toHaveCount(2)
+        ->and($result[0]['key'])->toBe('NODE_ENV')
+        ->and($result[0]['value'])->toBe('production')
+        ->and($result[1]['key'])->toBe('PORT')
+        ->and($result[1]['value'])->toBe(3000); // Integer values stay as integers from YAML
+});
+
+test('handles environment variables without values', function () {
+    $yaml = <<<'YAML'
+services:
+  app:
+    environment:
+      - API_KEY
+      - DEBUG=false
+YAML;
+
+    $result = extractHardcodedEnvironmentVariables($yaml);
+
+    expect($result)->toHaveCount(2)
+        ->and($result[0]['key'])->toBe('API_KEY')
+        ->and($result[0]['value'])->toBe('') // Variables without values get empty string, not null
+        ->and($result[1]['key'])->toBe('DEBUG')
+        ->and($result[1]['value'])->toBe('false');
+});
+
+test('returns empty collection for malformed YAML', function () {
+    $yaml = 'invalid: yaml: content::: [[[';
+
+    $result = extractHardcodedEnvironmentVariables($yaml);
+
+    expect($result)->toBeEmpty();
+});
+
+test('returns empty collection for empty compose file', function () {
+    $result = extractHardcodedEnvironmentVariables('');
+
+    expect($result)->toBeEmpty();
+});
+
+test('returns empty collection when no services defined', function () {
+    $yaml = <<<'YAML'
+version: '3.8'
+networks:
+  default:
+YAML;
+
+    $result = extractHardcodedEnvironmentVariables($yaml);
+
+    expect($result)->toBeEmpty();
+});
+
+test('returns empty collection when service has no environment section', function () {
+    $yaml = <<<'YAML'
+services:
+  app:
+    image: nginx
+YAML;
+
+    $result = extractHardcodedEnvironmentVariables($yaml);
+
+    expect($result)->toBeEmpty();
+});
+
+test('handles mixed associative and array format', function () {
+    $yaml = <<<'YAML'
+services:
+  app:
+    environment:
+      - NODE_ENV=production
+      PORT: 3000
+YAML;
+
+    $result = extractHardcodedEnvironmentVariables($yaml);
+
+    // Mixed format is invalid YAML and returns empty collection
+    expect($result)->toBeEmpty();
+});
diff --git a/tests/Unit/NestedEnvironmentVariableParsingTest.php b/tests/Unit/NestedEnvironmentVariableParsingTest.php
new file mode 100644
index 000000000..65e8738cc
--- /dev/null
+++ b/tests/Unit/NestedEnvironmentVariableParsingTest.php
@@ -0,0 +1,220 @@
+<?php
+
+/**
+ * Tests for nested environment variable parsing in Docker Compose files.
+ *
+ * These tests verify that the parser correctly handles nested variable substitution syntax
+ * like ${API_URL:-${SERVICE_URL_YOLO}/api} where defaults can contain other variable references.
+ */
+test('nested variable syntax is parsed correctly', function () {
+    // Test the exact scenario from the bug report
+    $input = '${API_URL:-${SERVICE_URL_YOLO}/api}';
+
+    $result = extractBalancedBraceContent($input, 0);
+
+    expect($result)->not->toBeNull()
+        ->and($result['content'])->toBe('API_URL:-${SERVICE_URL_YOLO}/api');
+
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    expect($split)->not->toBeNull()
+        ->and($split['variable'])->toBe('API_URL')
+        ->and($split['operator'])->toBe(':-')
+        ->and($split['default'])->toBe('${SERVICE_URL_YOLO}/api');
+});
+
+test('replaceVariables correctly extracts nested variable content', function () {
+    // Before the fix, this would incorrectly extract only up to the first closing brace
+    $result = replaceVariables('${API_URL:-${SERVICE_URL_YOLO}/api}');
+
+    // Should extract the full content, not just "${API_URL:-${SERVICE_URL_YOLO"
+    expect($result->value())->toBe('API_URL:-${SERVICE_URL_YOLO}/api')
+        ->and($result->value())->not->toBe('API_URL:-${SERVICE_URL_YOLO'); // Not truncated
+});
+
+test('nested defaults with path concatenation work', function () {
+    $input = '${REDIS_URL:-${SERVICE_URL_REDIS}/db/0}';
+
+    $result = extractBalancedBraceContent($input, 0);
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    expect($split['variable'])->toBe('REDIS_URL')
+        ->and($split['default'])->toBe('${SERVICE_URL_REDIS}/db/0');
+});
+
+test('deeply nested variables are handled', function () {
+    // Three levels of nesting
+    $input = '${A:-${B:-${C}}}';
+
+    $result = extractBalancedBraceContent($input, 0);
+
+    expect($result['content'])->toBe('A:-${B:-${C}}');
+
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    expect($split['variable'])->toBe('A')
+        ->and($split['default'])->toBe('${B:-${C}}');
+});
+
+test('multiple nested variables in default value', function () {
+    // Default value contains multiple variable references
+    $input = '${API:-${SERVICE_URL}:${SERVICE_PORT}/api}';
+
+    $result = extractBalancedBraceContent($input, 0);
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    expect($split['variable'])->toBe('API')
+        ->and($split['default'])->toBe('${SERVICE_URL}:${SERVICE_PORT}/api');
+});
+
+test('nested variables with different operators', function () {
+    // Nested variable uses different operator
+    $input = '${API_URL:-${SERVICE_URL?error message}/api}';
+
+    $result = extractBalancedBraceContent($input, 0);
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    expect($split['variable'])->toBe('API_URL')
+        ->and($split['operator'])->toBe(':-')
+        ->and($split['default'])->toBe('${SERVICE_URL?error message}/api');
+});
+
+test('backward compatibility with simple variables', function () {
+    // Simple variable without nesting should still work
+    $input = '${VAR}';
+
+    $result = replaceVariables($input);
+
+    expect($result->value())->toBe('VAR');
+});
+
+test('backward compatibility with single-level defaults', function () {
+    // Single-level default without nesting
+    $input = '${VAR:-default_value}';
+
+    $result = replaceVariables($input);
+
+    expect($result->value())->toBe('VAR:-default_value');
+
+    $split = splitOnOperatorOutsideNested($result->value());
+
+    expect($split['variable'])->toBe('VAR')
+        ->and($split['default'])->toBe('default_value');
+});
+
+test('backward compatibility with dash operator', function () {
+    $input = '${VAR-default}';
+
+    $result = replaceVariables($input);
+    $split = splitOnOperatorOutsideNested($result->value());
+
+    expect($split['operator'])->toBe('-');
+});
+
+test('backward compatibility with colon question operator', function () {
+    $input = '${VAR:?error message}';
+
+    $result = replaceVariables($input);
+    $split = splitOnOperatorOutsideNested($result->value());
+
+    expect($split['operator'])->toBe(':?')
+        ->and($split['default'])->toBe('error message');
+});
+
+test('backward compatibility with question operator', function () {
+    $input = '${VAR?error}';
+
+    $result = replaceVariables($input);
+    $split = splitOnOperatorOutsideNested($result->value());
+
+    expect($split['operator'])->toBe('?')
+        ->and($split['default'])->toBe('error');
+});
+
+test('SERVICE_URL magic variables in nested defaults', function () {
+    // Real-world scenario: SERVICE_URL_* magic variable used in nested default
+    $input = '${DATABASE_URL:-${SERVICE_URL_POSTGRES}/mydb}';
+
+    $result = extractBalancedBraceContent($input, 0);
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    expect($split['variable'])->toBe('DATABASE_URL')
+        ->and($split['default'])->toBe('${SERVICE_URL_POSTGRES}/mydb');
+
+    // Extract the nested SERVICE_URL variable
+    $nestedResult = extractBalancedBraceContent($split['default'], 0);
+
+    expect($nestedResult['content'])->toBe('SERVICE_URL_POSTGRES');
+});
+
+test('SERVICE_FQDN magic variables in nested defaults', function () {
+    $input = '${API_HOST:-${SERVICE_FQDN_API}}';
+
+    $result = extractBalancedBraceContent($input, 0);
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    expect($split['default'])->toBe('${SERVICE_FQDN_API}');
+
+    $nestedResult = extractBalancedBraceContent($split['default'], 0);
+
+    expect($nestedResult['content'])->toBe('SERVICE_FQDN_API');
+});
+
+test('complex real-world example', function () {
+    // Complex real-world scenario from the bug report
+    $input = '${API_URL:-${SERVICE_URL_YOLO}/api}';
+
+    // Step 1: Extract outer variable content
+    $result = extractBalancedBraceContent($input, 0);
+    expect($result['content'])->toBe('API_URL:-${SERVICE_URL_YOLO}/api');
+
+    // Step 2: Split on operator
+    $split = splitOnOperatorOutsideNested($result['content']);
+    expect($split['variable'])->toBe('API_URL');
+    expect($split['operator'])->toBe(':-');
+    expect($split['default'])->toBe('${SERVICE_URL_YOLO}/api');
+
+    // Step 3: Extract nested variable
+    $nestedResult = extractBalancedBraceContent($split['default'], 0);
+    expect($nestedResult['content'])->toBe('SERVICE_URL_YOLO');
+
+    // This verifies that:
+    // 1. API_URL should be created with value "${SERVICE_URL_YOLO}/api"
+    // 2. SERVICE_URL_YOLO should be recognized and created as magic variable
+});
+
+test('empty nested default values', function () {
+    $input = '${VAR:-${NESTED:-}}';
+
+    $result = extractBalancedBraceContent($input, 0);
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    expect($split['default'])->toBe('${NESTED:-}');
+
+    $nestedResult = extractBalancedBraceContent($split['default'], 0);
+    $nestedSplit = splitOnOperatorOutsideNested($nestedResult['content']);
+
+    expect($nestedSplit['default'])->toBe('');
+});
+
+test('nested variables with complex paths', function () {
+    $input = '${CONFIG_URL:-${SERVICE_URL_CONFIG}/v2/config.json}';
+
+    $result = extractBalancedBraceContent($input, 0);
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    expect($split['default'])->toBe('${SERVICE_URL_CONFIG}/v2/config.json');
+});
+
+test('operator precedence with nesting', function () {
+    // The first :- at depth 0 should be used, not the one inside nested braces
+    $input = '${A:-${B:-default}}';
+
+    $result = extractBalancedBraceContent($input, 0);
+    $split = splitOnOperatorOutsideNested($result['content']);
+
+    // Should split on first :- (at depth 0)
+    expect($split['variable'])->toBe('A')
+        ->and($split['operator'])->toBe(':-')
+        ->and($split['default'])->toBe('${B:-default}'); // Not split here
+});
diff --git a/tests/Unit/NestedEnvironmentVariableTest.php b/tests/Unit/NestedEnvironmentVariableTest.php
new file mode 100644
index 000000000..81b440927
--- /dev/null
+++ b/tests/Unit/NestedEnvironmentVariableTest.php
@@ -0,0 +1,207 @@
+<?php
+
+use function PHPUnit\Framework\assertNotNull;
+use function PHPUnit\Framework\assertNull;
+
+test('extractBalancedBraceContent extracts content from simple variable', function () {
+    $result = extractBalancedBraceContent('${VAR}', 0);
+
+    assertNotNull($result);
+    expect($result['content'])->toBe('VAR')
+        ->and($result['start'])->toBe(1)
+        ->and($result['end'])->toBe(5);
+});
+
+test('extractBalancedBraceContent handles nested braces', function () {
+    $result = extractBalancedBraceContent('${API_URL:-${SERVICE_URL_YOLO}/api}', 0);
+
+    assertNotNull($result);
+    expect($result['content'])->toBe('API_URL:-${SERVICE_URL_YOLO}/api')
+        ->and($result['start'])->toBe(1)
+        ->and($result['end'])->toBe(34); // Position of closing }
+});
+
+test('extractBalancedBraceContent handles triple nesting', function () {
+    $result = extractBalancedBraceContent('${A:-${B:-${C}}}', 0);
+
+    assertNotNull($result);
+    expect($result['content'])->toBe('A:-${B:-${C}}');
+});
+
+test('extractBalancedBraceContent returns null for unbalanced braces', function () {
+    $result = extractBalancedBraceContent('${VAR', 0);
+
+    assertNull($result);
+});
+
+test('extractBalancedBraceContent returns null when no braces', function () {
+    $result = extractBalancedBraceContent('VAR', 0);
+
+    assertNull($result);
+});
+
+test('extractBalancedBraceContent handles startPos parameter', function () {
+    $result = extractBalancedBraceContent('foo ${VAR} bar', 4);
+
+    assertNotNull($result);
+    expect($result['content'])->toBe('VAR')
+        ->and($result['start'])->toBe(5)
+        ->and($result['end'])->toBe(9);
+});
+
+test('splitOnOperatorOutsideNested splits on :- operator', function () {
+    $split = splitOnOperatorOutsideNested('API_URL:-default_value');
+
+    assertNotNull($split);
+    expect($split['variable'])->toBe('API_URL')
+        ->and($split['operator'])->toBe(':-')
+        ->and($split['default'])->toBe('default_value');
+});
+
+test('splitOnOperatorOutsideNested handles nested defaults', function () {
+    $split = splitOnOperatorOutsideNested('API_URL:-${SERVICE_URL_YOLO}/api');
+
+    assertNotNull($split);
+    expect($split['variable'])->toBe('API_URL')
+        ->and($split['operator'])->toBe(':-')
+        ->and($split['default'])->toBe('${SERVICE_URL_YOLO}/api');
+});
+
+test('splitOnOperatorOutsideNested handles dash operator', function () {
+    $split = splitOnOperatorOutsideNested('VAR-default');
+
+    assertNotNull($split);
+    expect($split['variable'])->toBe('VAR')
+        ->and($split['operator'])->toBe('-')
+        ->and($split['default'])->toBe('default');
+});
+
+test('splitOnOperatorOutsideNested handles colon question operator', function () {
+    $split = splitOnOperatorOutsideNested('VAR:?error message');
+
+    assertNotNull($split);
+    expect($split['variable'])->toBe('VAR')
+        ->and($split['operator'])->toBe(':?')
+        ->and($split['default'])->toBe('error message');
+});
+
+test('splitOnOperatorOutsideNested handles question operator', function () {
+    $split = splitOnOperatorOutsideNested('VAR?error');
+
+    assertNotNull($split);
+    expect($split['variable'])->toBe('VAR')
+        ->and($split['operator'])->toBe('?')
+        ->and($split['default'])->toBe('error');
+});
+
+test('splitOnOperatorOutsideNested returns null for simple variable', function () {
+    $split = splitOnOperatorOutsideNested('SIMPLE_VAR');
+
+    assertNull($split);
+});
+
+test('splitOnOperatorOutsideNested ignores operators inside nested braces', function () {
+    $split = splitOnOperatorOutsideNested('A:-${B:-default}');
+
+    assertNotNull($split);
+    // Should split on first :- (outside nested braces), not the one inside ${B:-default}
+    expect($split['variable'])->toBe('A')
+        ->and($split['operator'])->toBe(':-')
+        ->and($split['default'])->toBe('${B:-default}');
+});
+
+test('replaceVariables handles simple variable', function () {
+    $result = replaceVariables('${VAR}');
+
+    expect($result->value())->toBe('VAR');
+});
+
+test('replaceVariables handles nested expressions', function () {
+    $result = replaceVariables('${API_URL:-${SERVICE_URL_YOLO}/api}');
+
+    expect($result->value())->toBe('API_URL:-${SERVICE_URL_YOLO}/api');
+});
+
+test('replaceVariables handles variable with default', function () {
+    $result = replaceVariables('${API_URL:-http://localhost}');
+
+    expect($result->value())->toBe('API_URL:-http://localhost');
+});
+
+test('replaceVariables returns unchanged for non-variable string', function () {
+    $result = replaceVariables('not_a_variable');
+
+    expect($result->value())->toBe('not_a_variable');
+});
+
+test('replaceVariables handles triple nesting', function () {
+    $result = replaceVariables('${A:-${B:-${C}}}');
+
+    expect($result->value())->toBe('A:-${B:-${C}}');
+});
+
+test('replaceVariables fallback works for malformed input', function () {
+    // When braces are unbalanced, it falls back to old behavior
+    $result = replaceVariables('${VAR');
+
+    // Old behavior would extract everything before first }
+    // But since there's no }, it will extract 'VAR' (removing ${)
+    expect($result->value())->toContain('VAR');
+});
+
+test('extractBalancedBraceContent handles complex nested expression', function () {
+    $result = extractBalancedBraceContent('${API:-${SERVICE_URL}/api/v${VERSION:-1}}', 0);
+
+    assertNotNull($result);
+    expect($result['content'])->toBe('API:-${SERVICE_URL}/api/v${VERSION:-1}');
+});
+
+test('splitOnOperatorOutsideNested handles complex nested expression', function () {
+    $split = splitOnOperatorOutsideNested('API:-${SERVICE_URL}/api/v${VERSION:-1}');
+
+    assertNotNull($split);
+    expect($split['variable'])->toBe('API')
+        ->and($split['operator'])->toBe(':-')
+        ->and($split['default'])->toBe('${SERVICE_URL}/api/v${VERSION:-1}');
+});
+
+test('extractBalancedBraceContent finds second variable in string', function () {
+    $str = '${VAR1} and ${VAR2}';
+
+    // First variable
+    $result1 = extractBalancedBraceContent($str, 0);
+    assertNotNull($result1);
+    expect($result1['content'])->toBe('VAR1');
+
+    // Second variable
+    $result2 = extractBalancedBraceContent($str, $result1['end'] + 1);
+    assertNotNull($result2);
+    expect($result2['content'])->toBe('VAR2');
+});
+
+test('replaceVariables handles empty default value', function () {
+    $result = replaceVariables('${VAR:-}');
+
+    expect($result->value())->toBe('VAR:-');
+});
+
+test('splitOnOperatorOutsideNested handles empty default value', function () {
+    $split = splitOnOperatorOutsideNested('VAR:-');
+
+    assertNotNull($split);
+    expect($split['variable'])->toBe('VAR')
+        ->and($split['operator'])->toBe(':-')
+        ->and($split['default'])->toBe('');
+});
+
+test('replaceVariables handles brace format without dollar sign', function () {
+    // This format is used by the regex capture group in magic variable detection
+    $result = replaceVariables('{SERVICE_URL_YOLO}');
+    expect($result->value())->toBe('SERVICE_URL_YOLO');
+});
+
+test('replaceVariables handles truncated brace format', function () {
+    // When regex captures {VAR from a larger expression, no closing brace
+    $result = replaceVariables('{API_URL');
+    expect($result->value())->toBe('API_URL');
+});