diff --git a/common/nym-lp/src/config.rs b/common/nym-lp/src/config.rs
new file mode 100644
index 0000000000..824d56e7ac
--- /dev/null
+++ b/common/nym-lp/src/config.rs
@@ -0,0 +1,79 @@
+// Copyright 2025 - Nym Technologies SA <contact@nymtech.net>
+// SPDX-License-Identifier: Apache-2.0
+
+//! Configuration for LP protocol.
+//!
+//! AIDEV-NOTE: LP security stack = KKT (key fetch) → PSQ (PQ PSK) → Noise (transport).
+//! KEM algorithm selection affects only PSQ layer. Noise always uses X25519 DH.
+//! Migration to PQ KEMs (MlKem768, XWing) requires only config change.
+
+use nym_kkt::ciphersuite::KEM;
+use serde::{Deserialize, Serialize};
+use std::time::Duration;
+
+/// Default PSK time-to-live (1 hour, matches psk.rs implementation).
+pub const DEFAULT_PSK_TTL_SECS: u64 = 3600;
+
+/// Configuration for LP protocol.
+#[derive(Debug, Clone, Serialize, Deserialize)]
+pub struct LpConfig {
+    /// KEM algorithm for PSQ key encapsulation.
+    /// X25519 = classical (testing), MlKem768 = PQ, XWing = hybrid.
+    #[serde(with = "kem_serde")]
+    pub kem_algorithm: KEM,
+
+    /// PSK time-to-live in seconds.
+    pub psk_ttl_secs: u64,
+
+    /// Enable KKT for authenticated key distribution.
+    pub enable_kkt: bool,
+}
+
+impl Default for LpConfig {
+    fn default() -> Self {
+        Self {
+            kem_algorithm: KEM::X25519,
+            psk_ttl_secs: DEFAULT_PSK_TTL_SECS,
+            enable_kkt: true,
+        }
+    }
+}
+
+impl LpConfig {
+    /// Returns PSK TTL as Duration.
+    pub fn psk_ttl(&self) -> Duration {
+        Duration::from_secs(self.psk_ttl_secs)
+    }
+}
+
+mod kem_serde {
+    use nym_kkt::ciphersuite::KEM;
+    use serde::{Deserialize, Deserializer, Serialize, Serializer};
+
+    pub fn serialize<S>(kem: &KEM, serializer: S) -> Result<S::Ok, S::Error>
+    where
+        S: Serializer,
+    {
+        match kem {
+            KEM::X25519 => "X25519",
+            KEM::MlKem768 => "MlKem768",
+            KEM::XWing => "XWing",
+            KEM::McEliece => "McEliece",
+        }
+        .serialize(serializer)
+    }
+
+    pub fn deserialize<'de, D>(deserializer: D) -> Result<KEM, D::Error>
+    where
+        D: Deserializer<'de>,
+    {
+        let s = String::deserialize(deserializer)?;
+        match s.as_str() {
+            "X25519" => Ok(KEM::X25519),
+            "MlKem768" => Ok(KEM::MlKem768),
+            "XWing" => Ok(KEM::XWing),
+            "McEliece" => Ok(KEM::McEliece),
+            _ => Err(serde::de::Error::custom(format!("Unknown KEM: {}", s))),
+        }
+    }
+}
diff --git a/common/nym-lp/src/lib.rs b/common/nym-lp/src/lib.rs
index c761892080..727ad43846 100644
--- a/common/nym-lp/src/lib.rs
+++ b/common/nym-lp/src/lib.rs
@@ -2,6 +2,7 @@
 // SPDX-License-Identifier: Apache-2.0
 
 pub mod codec;
+pub mod config;
 pub mod error;
 pub mod keypair;
 pub mod kkt_orchestrator;
@@ -14,6 +15,7 @@ pub mod session;
 mod session_integration;
 pub mod session_manager;
 
+pub use config::LpConfig;
 pub use error::LpError;
 pub use message::{ClientHelloData, LpMessage};
 pub use packet::{BOOTSTRAP_RECEIVER_IDX, LpPacket, OuterHeader};
diff --git a/common/nym-lp/src/psk.rs b/common/nym-lp/src/psk.rs
index bf529e859b..502701a936 100644
--- a/common/nym-lp/src/psk.rs
+++ b/common/nym-lp/src/psk.rs
@@ -6,6 +6,12 @@
 //! This module implements identity-bound PSK derivation where both client and gateway
 //! derive the same PSK from their LP keypairs.
 //!
+//! AIDEV-NOTE: PSQ is embedded in Noise (not separate protocol) because:
+//! 1. Single round-trip: PSQ ciphertext piggybacks on Noise handshake messages
+//! 2. PSK binding: Noise XKpsk3 pattern authenticates both ECDH and PSQ-derived PSK
+//! 3. Simpler state machine: No separate PSQ negotiation phase needed
+//! 4. Atomic security: Session establishment either succeeds fully or fails completely
+//!
 //! Two approaches are supported:
 //! - **Legacy ECDH-only** (`derive_psk`) - Simple but no post-quantum security
 //! - **PSQ-enhanced** (`derive_psk_with_psq_*`) - Combines ECDH with post-quantum KEM
@@ -140,7 +146,12 @@ pub fn derive_psk_with_psq_initiator(
     let ecdh_secret = local_x25519_private.diffie_hellman(remote_x25519_public);
 
     // Step 2: PSQ encapsulation for post-quantum security
-    // Extract X25519 public key from EncapsulationKey
+    // AIDEV-NOTE: KEM algorithm migration path:
+    // - X25519: Current default for testing/compatibility (no HNDL resistance)
+    // - MlKem768: Future production default (NIST PQ Level 3, HNDL resistant)
+    // - XWing: Maximum security option (hybrid X25519 + ML-KEM)
+    // Migration: Update LpConfig.kem_algorithm, no protocol changes needed.
+    // KKT protocol adapts automatically to different KEM key sizes.
     let kem_pk = match remote_kem_public {
         EncapsulationKey::X25519(pk) => pk,
         _ => {
diff --git a/common/nym-lp/src/state_machine.rs b/common/nym-lp/src/state_machine.rs
index 984cc3011a..db46168369 100644
--- a/common/nym-lp/src/state_machine.rs
+++ b/common/nym-lp/src/state_machine.rs
@@ -2,6 +2,16 @@
 // SPDX-License-Identifier: Apache-2.0
 
 //! Lewes Protocol State Machine for managing connection lifecycle.
+//!
+//! AIDEV-NOTE: LP protocol flow (KKT → PSQ → Noise):
+//! 1. KKTExchange: Client requests gateway's KEM public key (signed for MITM protection)
+//! 2. Handshaking: Noise XKpsk3 with PSQ-derived PSK embedded in handshake messages
+//!    - PSQ ciphertext piggybacked on ClientHello (no extra round-trip)
+//!    - PSK = Blake3(ECDH || PSQ_secret || salt) provides hybrid classical+PQ security
+//! 3. Transport: ChaCha20-Poly1305 authenticated encryption with derived keys
+//!
+//! State machine ensures protocol steps execute in correct order. Invalid transitions
+//! return LpError, preventing protocol violations.
 
 use crate::{
     LpError,