diff --git a/client/internal/engine.go b/client/internal/engine.go
index d7e78cbf1..e2effecc3 100644
--- a/client/internal/engine.go
+++ b/client/internal/engine.go
@@ -18,7 +18,6 @@ import (
 
 	"github.com/netbirdio/netbird/client/internal/dns"
 	"github.com/netbirdio/netbird/client/internal/peer"
-	"github.com/netbirdio/netbird/client/internal/proxy"
 	"github.com/netbirdio/netbird/client/internal/routemanager"
 	nbssh "github.com/netbirdio/netbird/client/ssh"
 	nbdns "github.com/netbirdio/netbird/dns"
@@ -262,7 +261,7 @@ func (e *Engine) modifyPeers(peersUpdate []*mgmProto.RemotePeerConfig) error {
 	for _, p := range peersUpdate {
 		peerPubKey := p.GetWgPubKey()
 		if peerConn, ok := e.peerConns[peerPubKey]; ok {
-			if peerConn.GetConf().ProxyConfig.AllowedIps != strings.Join(p.AllowedIps, ",") {
+			if peerConn.WgConfig().AllowedIps != strings.Join(p.AllowedIps, ",") {
 				modified = append(modified, p)
 				continue
 			}
@@ -776,9 +775,7 @@ func (e *Engine) connWorker(conn *peer.Conn, peerKey string) {
 
 		// we might have received new STUN and TURN servers meanwhile, so update them
 		e.syncMsgMux.Lock()
-		conf := conn.GetConf()
-		conf.StunTurn = append(e.STUNs, e.TURNs...)
-		conn.UpdateConf(conf)
+		conn.UpdateStunTurn(append(e.STUNs, e.TURNs...))
 		e.syncMsgMux.Unlock()
 
 		err := conn.Open()
@@ -807,7 +804,7 @@ func (e Engine) createPeerConn(pubKey string, allowedIPs string) (*peer.Conn, er
 	stunTurn = append(stunTurn, e.STUNs...)
 	stunTurn = append(stunTurn, e.TURNs...)
 
-	proxyConfig := proxy.Config{
+	wgConfig := peer.WgConfig{
 		RemoteKey:    pubKey,
 		WgListenAddr: fmt.Sprintf("127.0.0.1:%d", e.config.WgPort),
 		WgInterface:  e.wgInterface,
@@ -826,7 +823,7 @@ func (e Engine) createPeerConn(pubKey string, allowedIPs string) (*peer.Conn, er
 		Timeout:              timeout,
 		UDPMux:               e.udpMux,
 		UDPMuxSrflx:          e.udpMuxSrflx,
-		ProxyConfig:          proxyConfig,
+		WgConfig:             wgConfig,
 		LocalWgPort:          e.config.WgPort,
 		NATExternalIPs:       e.parseNATExternalIPMappings(),
 		UserspaceBind:        e.wgInterface.IsUserspaceBind(),
diff --git a/client/internal/engine_test.go b/client/internal/engine_test.go
index 85413e049..6e02143d8 100644
--- a/client/internal/engine_test.go
+++ b/client/internal/engine_test.go
@@ -3,8 +3,6 @@ package internal
 import (
 	"context"
 	"fmt"
-	"github.com/netbirdio/netbird/iface/bind"
-	"github.com/pion/transport/v2/stdnet"
 	"net"
 	"net/netip"
 	"os"
@@ -15,6 +13,10 @@ import (
 	"testing"
 	"time"
 
+	"github.com/pion/transport/v2/stdnet"
+
+	"github.com/netbirdio/netbird/iface/bind"
+
 	log "github.com/sirupsen/logrus"
 	"github.com/stretchr/testify/assert"
 	"github.com/stretchr/testify/require"
@@ -367,9 +369,9 @@ func TestEngine_UpdateNetworkMap(t *testing.T) {
 					t.Errorf("expecting Engine.peerConns to contain peer %s", p)
 				}
 				expectedAllowedIPs := strings.Join(p.AllowedIps, ",")
-				if conn.GetConf().ProxyConfig.AllowedIps != expectedAllowedIPs {
+				if conn.WgConfig().AllowedIps != expectedAllowedIPs {
 					t.Errorf("expecting peer %s to have AllowedIPs= %s, got %s", p.GetWgPubKey(),
-						expectedAllowedIPs, conn.GetConf().ProxyConfig.AllowedIps)
+						expectedAllowedIPs, conn.WgConfig().AllowedIps)
 				}
 			}
 		})
diff --git a/client/internal/peer/conn.go b/client/internal/peer/conn.go
index 423a626d1..241493be6 100644
--- a/client/internal/peer/conn.go
+++ b/client/internal/peer/conn.go
@@ -11,7 +11,6 @@ import (
 	"github.com/pion/ice/v2"
 	log "github.com/sirupsen/logrus"
 
-	"github.com/netbirdio/netbird/client/internal/proxy"
 	"github.com/netbirdio/netbird/client/internal/stdnet"
 	"github.com/netbirdio/netbird/iface"
 	signal "github.com/netbirdio/netbird/signal/client"
@@ -37,7 +36,7 @@ type ConnConfig struct {
 
 	Timeout time.Duration
 
-	ProxyConfig proxy.Config
+	WgConfig WgConfig
 
 	UDPMux      ice.UDPMux
 	UDPMuxSrflx ice.UniversalUDPMux
@@ -92,7 +91,8 @@ type Conn struct {
 
 	statusRecorder *Status
 
-	proxy        proxy.Proxy
+	proxy        proxy
+	wgPeerMgr    *wgPeerManager
 	remoteModeCh chan ModeMessage
 	meta         meta
 
@@ -111,14 +111,14 @@ type ModeMessage struct {
 	Direct bool
 }
 
-// GetConf returns the connection config
-func (conn *Conn) GetConf() ConnConfig {
-	return conn.config
+// WgConfig returns the WireGuard config
+func (conn *Conn) WgConfig() WgConfig {
+	return conn.config.WgConfig
 }
 
-// UpdateConf updates the connection config
-func (conn *Conn) UpdateConf(conf ConnConfig) {
-	conn.config = conf
+// UpdateStunTurn update the turn and stun addresses
+func (conn *Conn) UpdateStunTurn(turnStun []*ice.URL) {
+	conn.config.StunTurn = turnStun
 }
 
 // NewConn creates a new not opened Conn to the remote peer.
@@ -198,7 +198,7 @@ func (conn *Conn) Open() error {
 
 	peerState := State{PubKey: conn.config.Key}
 
-	peerState.IP = strings.Split(conn.config.ProxyConfig.AllowedIps, "/")[0]
+	peerState.IP = strings.Split(conn.config.WgConfig.AllowedIps, "/")[0]
 	peerState.ConnStatusUpdate = time.Now()
 	peerState.ConnStatus = conn.status
 
@@ -290,19 +290,12 @@ func (conn *Conn) Open() error {
 		remoteWgPort = remoteOfferAnswer.WgListenPort
 	}
 	// the ice connection has been established successfully so we are ready to start the proxy
-	err = conn.startProxy(remoteConn, remoteWgPort)
+	err = conn.configureConnection(remoteConn, remoteWgPort)
 	if err != nil {
 		return err
 	}
 
-	if conn.proxy.Type() == proxy.TypeDirectNoProxy {
-		host, _, _ := net.SplitHostPort(remoteConn.LocalAddr().String())
-		rhost, _, _ := net.SplitHostPort(remoteConn.RemoteAddr().String())
-		// direct Wireguard connection
-		log.Infof("directly connected to peer %s [laddr <-> raddr] [%s:%d <-> %s:%d]", conn.config.Key, host, conn.config.LocalWgPort, rhost, remoteWgPort)
-	} else {
-		log.Infof("connected to peer %s [laddr <-> raddr] [%s <-> %s]", conn.config.Key, remoteConn.LocalAddr().String(), remoteConn.RemoteAddr().String())
-	}
+	log.Infof("connected to peer %s with proxy %v, [laddr <-> raddr] [%s <-> %s]", conn.config.Key, conn.proxy != nil, laddr, conn.wgPeerMgr.remoteAddr.String())
 
 	// wait until connection disconnected or has been closed externally (upper layer, e.g. engine)
 	select {
@@ -315,7 +308,7 @@ func (conn *Conn) Open() error {
 	}
 }
 
-// useProxy determines whether a direct connection (without a go proxy) is possible
+// isPreferredDirectMode determines whether a direct connection (without a go proxy) is not possible
 //
 // There are 3 cases:
 //
@@ -326,35 +319,33 @@ func (conn *Conn) Open() error {
 // * Local peer uses userspace interface with bind.ICEBind and is not relayed
 //
 // Please note, that this check happens when peers were already able to ping each other using ICE layer.
-func shouldUseProxy(pair *ice.CandidatePair, userspaceBind bool) bool {
-
+func isPreferredDirectMode(pair *ice.CandidatePair, userspaceBind bool) bool {
 	if !isRelayCandidate(pair.Local) && userspaceBind {
 		log.Debugf("shouldn't use proxy because using Bind and the connection is not relayed")
-		return false
+		return true
 	}
 
 	if !isHardNATCandidate(pair.Local) && isHostCandidateWithPublicIP(pair.Remote) {
 		log.Debugf("shouldn't use proxy because the local peer is not behind a hard NAT and the remote one has a public IP")
-		return false
+		return true
 	}
 
 	if !isHardNATCandidate(pair.Remote) && isHostCandidateWithPublicIP(pair.Local) {
 		log.Debugf("shouldn't use proxy because the remote peer is not behind a hard NAT and the local one has a public IP")
-		return false
+		return true
 	}
 
 	if isHostCandidateWithPrivateIP(pair.Local) && isHostCandidateWithPrivateIP(pair.Remote) && isSameNetworkPrefix(pair) {
 		log.Debugf("shouldn't use proxy because peers are in the same private /16 network")
-		return false
+		return true
 	}
 
 	if (isPeerReflexiveCandidateWithPrivateIP(pair.Local) && isHostCandidateWithPrivateIP(pair.Remote) ||
 		isHostCandidateWithPrivateIP(pair.Local) && isPeerReflexiveCandidateWithPrivateIP(pair.Remote)) && isSameNetworkPrefix(pair) {
 		log.Debugf("shouldn't use proxy because peers are in the same private /16 network and one peer is peer reflexive")
-		return false
+		return true
 	}
-
-	return true
+	return false
 }
 
 func isSameNetworkPrefix(pair *ice.CandidatePair) bool {
@@ -397,27 +388,38 @@ func isPublicIP(address string) bool {
 	return true
 }
 
-// startProxy starts proxying traffic from/to local Wireguard and sets connection status to StatusConnected
-func (conn *Conn) startProxy(remoteConn net.Conn, remoteWgPort int) error {
+// configureConnection starts proxying traffic from/to local Wireguard and sets connection status to StatusConnected
+func (conn *Conn) configureConnection(remoteConn net.Conn, remoteWgPort int) error {
 	conn.mu.Lock()
 	defer conn.mu.Unlock()
 
-	var pair *ice.CandidatePair
 	pair, err := conn.agent.GetSelectedCandidatePair()
 	if err != nil {
 		return err
 	}
 
-	peerState := State{PubKey: conn.config.Key}
-	p := conn.getProxyWithMessageExchange(pair, remoteWgPort)
-	conn.proxy = p
-	err = p.Start(remoteConn)
+	localDirectMode, remoteDirectMode := conn.getNetworkConditions(pair)
+
+	wgPeerMgr := newWgPeerManager(conn.config.WgConfig)
+	err = wgPeerMgr.configureWgPeer(localDirectMode, remoteDirectMode, conn.config.UserspaceBind, remoteConn, remoteWgPort)
 	if err != nil {
 		return err
 	}
+	conn.wgPeerMgr = wgPeerMgr
+
+	if conn.isProxyNeeded(localDirectMode, remoteDirectMode) {
+		p := NewWireGuardProxy(conn.config.WgConfig.WgListenAddr, conn.config.WgConfig.RemoteKey)
+		err = p.Start(remoteConn)
+		if err != nil {
+			return err
+		}
+		conn.proxy = p
+	}
 
 	conn.status = StatusConnected
 
+	// update Peer's state
+	peerState := State{PubKey: conn.config.Key}
 	peerState.ConnStatus = conn.status
 	peerState.ConnStatusUpdate = time.Now()
 	peerState.LocalIceCandidateType = pair.Local.Type().String()
@@ -425,7 +427,7 @@ func (conn *Conn) startProxy(remoteConn net.Conn, remoteWgPort int) error {
 	if pair.Local.Type() == ice.CandidateTypeRelay || pair.Remote.Type() == ice.CandidateTypeRelay {
 		peerState.Relayed = true
 	}
-	peerState.Direct = p.Type() == proxy.TypeDirectNoProxy || p.Type() == proxy.TypeNoProxy
+	peerState.Direct = conn.proxy == nil
 
 	err = conn.statusRecorder.UpdatePeerState(peerState)
 	if err != nil {
@@ -435,27 +437,29 @@ func (conn *Conn) startProxy(remoteConn net.Conn, remoteWgPort int) error {
 	return nil
 }
 
-func (conn *Conn) getProxyWithMessageExchange(pair *ice.CandidatePair, remoteWgPort int) proxy.Proxy {
-	useProxy := shouldUseProxy(pair, conn.config.UserspaceBind)
-	localDirectMode := !useProxy
-	remoteDirectMode := localDirectMode
+func (conn *Conn) getNetworkConditions(pair *ice.CandidatePair) (bool, bool) {
+	var localDirectMode, remoteDirectMode bool
+	localDirectMode = isPreferredDirectMode(pair, conn.config.UserspaceBind)
 
 	if conn.meta.protoSupport.DirectCheck {
 		go conn.sendLocalDirectMode(localDirectMode)
 		// will block until message received or timeout
 		remoteDirectMode = conn.receiveRemoteDirectMode()
+	} else {
+		remoteDirectMode = localDirectMode
 	}
+	return localDirectMode, remoteDirectMode
+}
 
+func (conn *Conn) isProxyNeeded(localDirectMode, remoteDirectMode bool) bool {
 	if conn.config.UserspaceBind && localDirectMode {
-		return proxy.NewNoProxy(conn.config.ProxyConfig)
+		return false
 	}
 
 	if localDirectMode && remoteDirectMode {
-		return proxy.NewDirectNoProxy(conn.config.ProxyConfig, remoteWgPort)
+		return false
 	}
-
-	log.Debugf("falling back to local proxy mode with peer %s", conn.config.Key)
-	return proxy.NewWireGuardProxy(conn.config.ProxyConfig)
+	return true
 }
 
 func (conn *Conn) sendLocalDirectMode(localMode bool) {
@@ -500,20 +504,26 @@ func (conn *Conn) cleanup() error {
 	conn.mu.Lock()
 	defer conn.mu.Unlock()
 
+	var err1, err2, err3 error
 	if conn.agent != nil {
-		err := conn.agent.Close()
-		if err != nil {
-			return err
+		err1 = conn.agent.Close()
+		if err1 == nil {
+			conn.agent = nil
+		}
+	}
+
+	if conn.wgPeerMgr != nil {
+		err2 = conn.wgPeerMgr.close()
+		if err2 == nil {
+			conn.wgPeerMgr = nil
 		}
-		conn.agent = nil
 	}
 
 	if conn.proxy != nil {
-		err := conn.proxy.Close()
-		if err != nil {
-			return err
+		err3 = conn.proxy.Close()
+		if err3 == nil {
+			conn.proxy = nil
 		}
-		conn.proxy = nil
 	}
 
 	if conn.notifyDisconnected != nil {
@@ -535,8 +545,13 @@ func (conn *Conn) cleanup() error {
 	}
 
 	log.Debugf("cleaned up connection to peer %s", conn.config.Key)
-
-	return nil
+	if err1 != nil {
+		return err1
+	}
+	if err2 != nil {
+		return err2
+	}
+	return err3
 }
 
 // SetSignalOffer sets a handler function to be triggered by Conn when a new connection offer has to be signalled to the remote peer
diff --git a/client/internal/peer/conn_test.go b/client/internal/peer/conn_test.go
index c34f6fed5..9bfbd7f69 100644
--- a/client/internal/peer/conn_test.go
+++ b/client/internal/peer/conn_test.go
@@ -11,7 +11,6 @@ import (
 	"github.com/pion/ice/v2"
 	"golang.org/x/sync/errgroup"
 
-	"github.com/netbirdio/netbird/client/internal/proxy"
 	"github.com/netbirdio/netbird/iface"
 	sproto "github.com/netbirdio/netbird/signal/proto"
 )
@@ -22,7 +21,7 @@ var connConf = ConnConfig{
 	StunTurn:           []*ice.URL{},
 	InterfaceBlackList: nil,
 	Timeout:            time.Second,
-	ProxyConfig:        proxy.Config{},
+	WgConfig:           WgConfig{},
 	LocalWgPort:        51820,
 }
 
@@ -244,87 +243,87 @@ func TestConn_ShouldUseProxy(t *testing.T) {
 		expected    bool
 	}{
 		{
-			name: "Use Proxy When Local Candidate Is Relay",
+			name: "Use proxy When Local Candidate Is Relay",
 			candatePair: &ice.CandidatePair{
 				Local:  relayCandidate,
 				Remote: privateHostCandidate,
 			},
-			expected: true,
+			expected: false,
 		},
 		{
-			name: "Use Proxy When Remote Candidate Is Relay",
+			name: "Use proxy When Remote Candidate Is Relay",
 			candatePair: &ice.CandidatePair{
 				Local:  privateHostCandidate,
 				Remote: relayCandidate,
 			},
-			expected: true,
+			expected: false,
 		},
 		{
-			name: "Use Proxy When Local Candidate Is Peer Reflexive",
+			name: "Use proxy When Local Candidate Is Peer Reflexive",
 			candatePair: &ice.CandidatePair{
 				Local:  prflxCandidate,
 				Remote: privateHostCandidate,
 			},
-			expected: true,
+			expected: false,
 		},
 		{
-			name: "Use Proxy When Remote Candidate Is Peer Reflexive",
+			name: "Use proxy When Remote Candidate Is Peer Reflexive",
 			candatePair: &ice.CandidatePair{
 				Local:  privateHostCandidate,
 				Remote: prflxCandidate,
 			},
-			expected: true,
+			expected: false,
 		},
 		{
-			name: "Don't Use Proxy When Local Candidate Is Public And Remote Is Private",
+			name: "Don't Use proxy When Local Candidate Is Public And Remote Is Private",
 			candatePair: &ice.CandidatePair{
 				Local:  publicHostCandidate,
 				Remote: privateHostCandidate,
 			},
-			expected: false,
+			expected: true,
 		},
 		{
-			name: "Don't Use Proxy When Remote Candidate Is Public And Local Is Private",
+			name: "Don't Use proxy When Remote Candidate Is Public And Local Is Private",
 			candatePair: &ice.CandidatePair{
 				Local:  privateHostCandidate,
 				Remote: publicHostCandidate,
 			},
-			expected: false,
+			expected: true,
 		},
 		{
-			name: "Don't Use Proxy When Local Candidate is Public And Remote Is Server Reflexive",
+			name: "Don't Use proxy When Local Candidate is Public And Remote Is Server Reflexive",
 			candatePair: &ice.CandidatePair{
 				Local:  publicHostCandidate,
 				Remote: srflxCandidate,
 			},
-			expected: false,
+			expected: true,
 		},
 		{
-			name: "Don't Use Proxy When Remote Candidate is Public And Local Is Server Reflexive",
+			name: "Don't Use proxy When Remote Candidate is Public And Local Is Server Reflexive",
 			candatePair: &ice.CandidatePair{
 				Local:  srflxCandidate,
 				Remote: publicHostCandidate,
 			},
-			expected: false,
+			expected: true,
 		},
 		{
-			name: "Don't Use Proxy When Both Candidates Are Public",
+			name: "Don't Use proxy When Both Candidates Are Public",
 			candatePair: &ice.CandidatePair{
 				Local:  publicHostCandidate,
 				Remote: publicHostCandidate,
 			},
-			expected: false,
+			expected: true,
 		},
 		{
-			name: "Don't Use Proxy When Both Candidates Are Private",
+			name: "Don't Use proxy When Both Candidates Are Private",
 			candatePair: &ice.CandidatePair{
 				Local:  privateHostCandidate,
 				Remote: privateHostCandidate,
 			},
-			expected: false,
+			expected: true,
 		},
 		{
-			name: "Don't Use Proxy When Both Candidates are in private network and one is peer reflexive",
+			name: "Don't Use proxy When Both Candidates are in private network and one is peer reflexive",
 			candatePair: &ice.CandidatePair{
 				Local: &mockICECandidate{AddressFunc: func() string {
 					return "10.16.102.168"
@@ -339,10 +338,10 @@ func TestConn_ShouldUseProxy(t *testing.T) {
 						return ice.CandidateTypePeerReflexive
 					}},
 			},
-			expected: false,
+			expected: true,
 		},
 		{
-			name: "Should Use Proxy When Both Candidates are in private network and both are peer reflexive",
+			name: "Should Use proxy When Both Candidates are in private network and both are peer reflexive",
 			candatePair: &ice.CandidatePair{
 				Local: &mockICECandidate{AddressFunc: func() string {
 					return "10.16.102.168"
@@ -357,13 +356,13 @@ func TestConn_ShouldUseProxy(t *testing.T) {
 						return ice.CandidateTypePeerReflexive
 					}},
 			},
-			expected: true,
+			expected: false,
 		},
 	}
 
 	for _, testCase := range testCases {
 		t.Run(testCase.name, func(t *testing.T) {
-			result := shouldUseProxy(testCase.candatePair, false)
+			result := isPreferredDirectMode(testCase.candatePair, false)
 			if result != testCase.expected {
 				t.Errorf("got a different result. Expected %t Got %t", testCase.expected, result)
 			}
@@ -394,57 +393,57 @@ func TestGetProxyWithMessageExchange(t *testing.T) {
 		candatePair            *ice.CandidatePair
 		inputDirectModeSupport bool
 		inputRemoteModeMessage bool
-		expected               proxy.Type
+		expected               bool
 	}{
 		{
-			name: "Should Result In Using Wireguard Proxy When Local Eval Is Use Proxy",
+			name: "Should Result In Using Wireguard proxy When Local Eval Is Use proxy",
 			candatePair: &ice.CandidatePair{
 				Local:  relayCandidate,
 				Remote: publicHostCandidate,
 			},
 			inputDirectModeSupport: true,
 			inputRemoteModeMessage: true,
-			expected:               proxy.TypeWireGuard,
+			expected:               true,
 		},
 		{
-			name: "Should Result In Using Wireguard Proxy When Remote Eval Is Use Proxy",
+			name: "Should Result In Using Wireguard proxy When Remote Eval Is Use proxy",
 			candatePair: &ice.CandidatePair{
 				Local:  publicHostCandidate,
 				Remote: publicHostCandidate,
 			},
 			inputDirectModeSupport: true,
 			inputRemoteModeMessage: false,
-			expected:               proxy.TypeWireGuard,
+			expected:               true,
 		},
 		{
-			name: "Should Result In Using Wireguard Proxy When Remote Direct Mode Support Is False And Local Eval Is Use Proxy",
+			name: "Should Result In Using Wireguard proxy When Remote Direct Mode Support Is False And Local Eval Is Use proxy",
 			candatePair: &ice.CandidatePair{
 				Local:  relayCandidate,
 				Remote: publicHostCandidate,
 			},
 			inputDirectModeSupport: false,
 			inputRemoteModeMessage: false,
-			expected:               proxy.TypeWireGuard,
+			expected:               true,
 		},
 		{
-			name: "Should Result In Using Direct When Remote Direct Mode Support Is False And Local Eval Is No Use Proxy",
+			name: "Should Result In Using Direct When Remote Direct Mode Support Is False And Local Eval Is No Use proxy",
 			candatePair: &ice.CandidatePair{
 				Local:  publicHostCandidate,
 				Remote: publicHostCandidate,
 			},
 			inputDirectModeSupport: false,
 			inputRemoteModeMessage: false,
-			expected:               proxy.TypeDirectNoProxy,
+			expected:               false,
 		},
 		{
-			name: "Should Result In Using Direct When Local And Remote Eval Is No Proxy",
+			name: "Should Result In Using Direct When Local And Remote Eval Is No proxy",
 			candatePair: &ice.CandidatePair{
 				Local:  publicHostCandidate,
 				Remote: publicHostCandidate,
 			},
 			inputDirectModeSupport: true,
 			inputRemoteModeMessage: true,
-			expected:               proxy.TypeDirectNoProxy,
+			expected:               false,
 		},
 	}
 	for _, testCase := range testCases {
@@ -464,15 +463,15 @@ func TestGetProxyWithMessageExchange(t *testing.T) {
 					Direct: testCase.inputRemoteModeMessage,
 				})
 			})
-
-			resultProxy := conn.getProxyWithMessageExchange(testCase.candatePair, 1000)
+			conn.config.UserspaceBind = false
+			resultProxy := conn.isProxyNeeded(testCase.inputDirectModeSupport, testCase.inputRemoteModeMessage)
 
 			err = g.Wait()
 			if err != nil {
 				t.Error(err)
 			}
-			if resultProxy.Type() != testCase.expected {
-				t.Errorf("result didn't match expected value: Expected: %s, Got: %s", testCase.expected, resultProxy.Type())
+			if resultProxy != testCase.expected {
+				t.Errorf("result didn't match expected value: Expected: %v, Got: %v", testCase.expected, resultProxy)
 			}
 		})
 	}
diff --git a/client/internal/peer/proxy.go b/client/internal/peer/proxy.go
new file mode 100644
index 000000000..1c3ba67e8
--- /dev/null
+++ b/client/internal/peer/proxy.go
@@ -0,0 +1,12 @@
+package peer
+
+import (
+	"io"
+	"net"
+)
+
+type proxy interface {
+	io.Closer
+	// Start creates a local remoteConn and starts proxying data from/to remoteConn
+	Start(remoteConn net.Conn) error
+}
diff --git a/client/internal/proxy/wireguard.go b/client/internal/peer/proxy_wg.go
similarity index 62%
rename from client/internal/proxy/wireguard.go
rename to client/internal/peer/proxy_wg.go
index ec3c6a730..c2281055c 100644
--- a/client/internal/proxy/wireguard.go
+++ b/client/internal/peer/proxy_wg.go
@@ -1,9 +1,10 @@
-package proxy
+package peer
 
 import (
 	"context"
-	log "github.com/sirupsen/logrus"
 	"net"
+
+	log "github.com/sirupsen/logrus"
 )
 
 // WireGuardProxy proxies
@@ -11,49 +12,32 @@ type WireGuardProxy struct {
 	ctx    context.Context
 	cancel context.CancelFunc
 
-	config Config
+	wgListenAddr string
+	remoteKey    string
 
 	remoteConn net.Conn
 	localConn  net.Conn
 }
 
-func NewWireGuardProxy(config Config) *WireGuardProxy {
-	p := &WireGuardProxy{config: config}
+func NewWireGuardProxy(wgListenAddr, remoteKey string) *WireGuardProxy {
+	p := &WireGuardProxy{
+		wgListenAddr: wgListenAddr,
+		remoteKey:    remoteKey,
+	}
 	p.ctx, p.cancel = context.WithCancel(context.Background())
 	return p
 }
 
-func (p *WireGuardProxy) updateEndpoint() error {
-	udpAddr, err := net.ResolveUDPAddr(p.localConn.LocalAddr().Network(), p.localConn.LocalAddr().String())
-	if err != nil {
-		return err
-	}
-	// add local proxy connection as a Wireguard peer
-	err = p.config.WgInterface.UpdatePeer(p.config.RemoteKey, p.config.AllowedIps, DefaultWgKeepAlive,
-		udpAddr, p.config.PreSharedKey)
-	if err != nil {
-		return err
-	}
-
-	return nil
-}
-
 func (p *WireGuardProxy) Start(remoteConn net.Conn) error {
 	p.remoteConn = remoteConn
 
 	var err error
-	p.localConn, err = net.Dial("udp", p.config.WgListenAddr)
+	p.localConn, err = net.Dial("udp", p.wgListenAddr)
 	if err != nil {
 		log.Errorf("failed dialing to local Wireguard port %s", err)
 		return err
 	}
 
-	err = p.updateEndpoint()
-	if err != nil {
-		log.Errorf("error while updating Wireguard peer endpoint [%s] %v", p.config.RemoteKey, err)
-		return err
-	}
-
 	go p.proxyToRemote()
 	go p.proxyToLocal()
 
@@ -68,10 +52,6 @@ func (p *WireGuardProxy) Close() error {
 			return err
 		}
 	}
-	err := p.config.WgInterface.RemovePeer(p.config.RemoteKey)
-	if err != nil {
-		return err
-	}
 	return nil
 }
 
@@ -83,7 +63,7 @@ func (p *WireGuardProxy) proxyToRemote() {
 	for {
 		select {
 		case <-p.ctx.Done():
-			log.Debugf("stopped proxying to remote peer %s due to closed connection", p.config.RemoteKey)
+			log.Debugf("stopped proxying to remote peer %s due to closed connection", p.remoteKey)
 			return
 		default:
 			n, err := p.localConn.Read(buf)
@@ -107,7 +87,7 @@ func (p *WireGuardProxy) proxyToLocal() {
 	for {
 		select {
 		case <-p.ctx.Done():
-			log.Debugf("stopped proxying from remote peer %s due to closed connection", p.config.RemoteKey)
+			log.Debugf("stopped proxying from remote peer %s due to closed connection", p.remoteKey)
 			return
 		default:
 			n, err := p.remoteConn.Read(buf)
@@ -122,7 +102,3 @@ func (p *WireGuardProxy) proxyToLocal() {
 		}
 	}
 }
-
-func (p *WireGuardProxy) Type() Type {
-	return TypeWireGuard
-}
diff --git a/client/internal/peer/wg_peer_manager.go b/client/internal/peer/wg_peer_manager.go
new file mode 100644
index 000000000..090bbd023
--- /dev/null
+++ b/client/internal/peer/wg_peer_manager.go
@@ -0,0 +1,68 @@
+package peer
+
+import (
+	"net"
+	"time"
+
+	"golang.zx2c4.com/wireguard/wgctrl/wgtypes"
+
+	"github.com/netbirdio/netbird/iface"
+)
+
+const defaultWgKeepAlive = 25 * time.Second
+
+type WgConfig struct {
+	WgListenAddr string
+	RemoteKey    string
+	WgInterface  *iface.WGIface
+	AllowedIps   string
+	PreSharedKey *wgtypes.Key
+}
+
+type wgPeerManager struct {
+	wgConfig WgConfig
+
+	remoteAddr *net.UDPAddr
+}
+
+func newWgPeerManager(wgConfig WgConfig) *wgPeerManager {
+	return &wgPeerManager{
+		wgConfig: wgConfig,
+	}
+}
+
+func (mgr *wgPeerManager) configureWgPeer(localDirectMode, remoteDirectMode, userspaceBind bool, remoteConn net.Conn, remoteWgPort int) error {
+	var err error
+	mgr.remoteAddr, err = net.ResolveUDPAddr("udp", remoteConn.RemoteAddr().String())
+	if err != nil {
+		return err
+	}
+
+	if remoteDirectMode {
+		mgr.remoteAddr.Port = remoteWgPort
+	}
+
+	if userspaceBind && localDirectMode {
+		return mgr.updateWgPeer()
+	}
+
+	if localDirectMode && remoteDirectMode {
+		return mgr.updateWgPeer()
+	}
+
+	mgr.remoteAddr, err = net.ResolveUDPAddr("udp", mgr.wgConfig.WgListenAddr)
+	if err != nil {
+		return err
+	}
+	return mgr.updateWgPeer()
+}
+
+// Close removes peer from the WireGuard interface
+func (mgr *wgPeerManager) close() error {
+	return mgr.wgConfig.WgInterface.RemovePeer(mgr.wgConfig.RemoteKey)
+}
+
+func (mgr *wgPeerManager) updateWgPeer() error {
+	return mgr.wgConfig.WgInterface.UpdatePeer(mgr.wgConfig.RemoteKey, mgr.wgConfig.AllowedIps, defaultWgKeepAlive,
+		mgr.remoteAddr, mgr.wgConfig.PreSharedKey)
+}
diff --git a/client/internal/proxy/direct.go b/client/internal/proxy/direct.go
deleted file mode 100644
index 58603a831..000000000
--- a/client/internal/proxy/direct.go
+++ /dev/null
@@ -1,57 +0,0 @@
-package proxy
-
-import (
-	log "github.com/sirupsen/logrus"
-	"net"
-)
-
-// DirectNoProxy is used when there is no need for a proxy between ICE and WireGuard.
-// This is possible in either of these cases:
-// - peers are in the same local network
-// - one of the peers has a public static IP (host)
-// DirectNoProxy will just update remote peer with a remote host and fixed WireGuard port (r.g. 51820).
-// In order DirectNoProxy to work, WireGuard port has to be fixed for the time being.
-type DirectNoProxy struct {
-	config Config
-	// RemoteWgListenPort is a WireGuard port of a remote peer.
-	// It is used instead of the hardcoded 51820 port.
-	RemoteWgListenPort int
-}
-
-// NewDirectNoProxy creates a new DirectNoProxy with a provided config and remote peer's WireGuard listen port
-func NewDirectNoProxy(config Config, remoteWgPort int) *DirectNoProxy {
-	return &DirectNoProxy{config: config, RemoteWgListenPort: remoteWgPort}
-}
-
-// Close removes peer from the WireGuard interface
-func (p *DirectNoProxy) Close() error {
-	err := p.config.WgInterface.RemovePeer(p.config.RemoteKey)
-	if err != nil {
-		return err
-	}
-	return nil
-}
-
-// Start just updates WireGuard peer with the remote IP and default WireGuard port
-func (p *DirectNoProxy) Start(remoteConn net.Conn) error {
-
-	log.Debugf("using DirectNoProxy while connecting to peer %s", p.config.RemoteKey)
-	addr, err := net.ResolveUDPAddr("udp", remoteConn.RemoteAddr().String())
-	if err != nil {
-		return err
-	}
-	addr.Port = p.RemoteWgListenPort
-	err = p.config.WgInterface.UpdatePeer(p.config.RemoteKey, p.config.AllowedIps, DefaultWgKeepAlive,
-		addr, p.config.PreSharedKey)
-
-	if err != nil {
-		return err
-	}
-
-	return nil
-}
-
-// Type returns the type of this proxy
-func (p *DirectNoProxy) Type() Type {
-	return TypeDirectNoProxy
-}
diff --git a/client/internal/proxy/dummy.go b/client/internal/proxy/dummy.go
deleted file mode 100644
index ebd7cd68f..000000000
--- a/client/internal/proxy/dummy.go
+++ /dev/null
@@ -1,72 +0,0 @@
-package proxy
-
-import (
-	"context"
-	log "github.com/sirupsen/logrus"
-	"net"
-	"time"
-)
-
-// DummyProxy just sends pings to the RemoteKey peer and reads responses
-type DummyProxy struct {
-	conn   net.Conn
-	remote string
-	ctx    context.Context
-	cancel context.CancelFunc
-}
-
-func NewDummyProxy(remote string) *DummyProxy {
-	p := &DummyProxy{remote: remote}
-	p.ctx, p.cancel = context.WithCancel(context.Background())
-	return p
-}
-
-func (p *DummyProxy) Close() error {
-	p.cancel()
-	return nil
-}
-
-func (p *DummyProxy) Start(remoteConn net.Conn) error {
-	p.conn = remoteConn
-	go func() {
-		buf := make([]byte, 1500)
-		for {
-			select {
-			case <-p.ctx.Done():
-				return
-			default:
-				_, err := p.conn.Read(buf)
-				if err != nil {
-					log.Errorf("error while reading RemoteKey %s proxy %v", p.remote, err)
-					return
-				}
-				//log.Debugf("received %s from %s", string(buf[:n]), p.remote)
-			}
-
-		}
-	}()
-
-	go func() {
-		for {
-			select {
-			case <-p.ctx.Done():
-				return
-			default:
-				_, err := p.conn.Write([]byte("hello"))
-				//log.Debugf("sent ping to %s", p.remote)
-				if err != nil {
-					log.Errorf("error while writing to RemoteKey %s proxy %v", p.remote, err)
-					return
-				}
-				time.Sleep(5 * time.Second)
-			}
-		}
-
-	}()
-
-	return nil
-}
-
-func (p *DummyProxy) Type() Type {
-	return TypeDummy
-}
diff --git a/client/internal/proxy/noproxy.go b/client/internal/proxy/noproxy.go
deleted file mode 100644
index dcfe182fd..000000000
--- a/client/internal/proxy/noproxy.go
+++ /dev/null
@@ -1,42 +0,0 @@
-package proxy
-
-import (
-	log "github.com/sirupsen/logrus"
-	"net"
-)
-
-// NoProxy is used just to configure WireGuard without any local proxy in between.
-// Used when the WireGuard interface is userspace and uses bind.ICEBind
-type NoProxy struct {
-	config Config
-}
-
-// NewNoProxy creates a new NoProxy with a provided config
-func NewNoProxy(config Config) *NoProxy {
-	return &NoProxy{config: config}
-}
-
-// Close removes peer from the WireGuard interface
-func (p *NoProxy) Close() error {
-	err := p.config.WgInterface.RemovePeer(p.config.RemoteKey)
-	if err != nil {
-		return err
-	}
-	return nil
-}
-
-// Start just updates WireGuard peer with the remote address
-func (p *NoProxy) Start(remoteConn net.Conn) error {
-
-	log.Debugf("using NoProxy to connect to peer %s at %s", p.config.RemoteKey, remoteConn.RemoteAddr().String())
-	addr, err := net.ResolveUDPAddr("udp", remoteConn.RemoteAddr().String())
-	if err != nil {
-		return err
-	}
-	return p.config.WgInterface.UpdatePeer(p.config.RemoteKey, p.config.AllowedIps, DefaultWgKeepAlive,
-		addr, p.config.PreSharedKey)
-}
-
-func (p *NoProxy) Type() Type {
-	return TypeNoProxy
-}
diff --git a/client/internal/proxy/proxy.go b/client/internal/proxy/proxy.go
deleted file mode 100644
index a0b9e98a1..000000000
--- a/client/internal/proxy/proxy.go
+++ /dev/null
@@ -1,35 +0,0 @@
-package proxy
-
-import (
-	"github.com/netbirdio/netbird/iface"
-	"golang.zx2c4.com/wireguard/wgctrl/wgtypes"
-	"io"
-	"net"
-	"time"
-)
-
-const DefaultWgKeepAlive = 25 * time.Second
-
-type Type string
-
-const (
-	TypeDirectNoProxy Type = "DirectNoProxy"
-	TypeWireGuard     Type = "WireGuard"
-	TypeDummy         Type = "Dummy"
-	TypeNoProxy       Type = "NoProxy"
-)
-
-type Config struct {
-	WgListenAddr string
-	RemoteKey    string
-	WgInterface  *iface.WGIface
-	AllowedIps   string
-	PreSharedKey *wgtypes.Key
-}
-
-type Proxy interface {
-	io.Closer
-	// Start creates a local remoteConn and starts proxying data from/to remoteConn
-	Start(remoteConn net.Conn) error
-	Type() Type
-}
diff --git a/signal/client/grpc.go b/signal/client/grpc.go
index 3c63fbe40..b8514af1f 100644
--- a/signal/client/grpc.go
+++ b/signal/client/grpc.go
@@ -350,7 +350,7 @@ func (c *GrpcClient) receive(stream proto.SignalExchange_ConnectStreamClient,
 		} else if err != nil {
 			return err
 		}
-		log.Debugf("received a new message from Peer [fingerprint: %s]", msg.Key)
+		log.Tracef("received a new message from Peer [fingerprint: %s]", msg.Key)
 
 		decryptedMessage, err := c.decryptMessage(msg)
 		if err != nil {