diff --git a/deploy/setup.sh b/deploy/setup.sh
index fd9848d..f42b7d2 100644
--- a/deploy/setup.sh
+++ b/deploy/setup.sh
@@ -17,10 +17,10 @@ GREEN='\033[0;32m'
 YELLOW='\033[1;33m'
 NC='\033[0m' # No Color
 
-# Function to generate random string
+# Function to generate random string (alphanumeric only to avoid sed issues)
 generate_secret() {
     local length=${1:-32}
-    openssl rand -base64 $length | tr -d '\n'
+    openssl rand -hex $length | head -c $length
 }
 
 # Function to generate JWT token
@@ -30,19 +30,39 @@ generate_jwt() {
 
     # JWT Header (base64url encoded)
     local header='{"alg":"HS256","typ":"JWT"}'
-    local header_b64=$(echo -n "$header" | base64 | tr '+/' '-_' | tr -d '=')
+    local header_b64=$(echo -n "$header" | base64 | tr '+/' '-_' | tr -d '=' | tr -d '\n')
 
     # JWT Payload - 100 years expiry
     local exp=$(($(date +%s) + 3153600000))
     local payload="{\"role\":\"$role\",\"iss\":\"supabase\",\"iat\":$(date +%s),\"exp\":$exp}"
-    local payload_b64=$(echo -n "$payload" | base64 | tr '+/' '-_' | tr -d '=')
+    local payload_b64=$(echo -n "$payload" | base64 | tr '+/' '-_' | tr -d '=' | tr -d '\n')
 
     # Create signature
-    local signature=$(echo -n "${header_b64}.${payload_b64}" | openssl dgst -sha256 -hmac "$secret" -binary | base64 | tr '+/' '-_' | tr -d '=')
+    local signature=$(echo -n "${header_b64}.${payload_b64}" | openssl dgst -sha256 -hmac "$secret" -binary | base64 | tr '+/' '-_' | tr -d '=' | tr -d '\n')
 
     echo "${header_b64}.${payload_b64}.${signature}"
 }
 
+# Function to update a variable in .env file using awk (more robust than sed)
+update_env_var() {
+    local var_name=$1
+    local var_value=$2
+    local env_file=".env"
+
+    # Create temp file
+    local tmp_file=$(mktemp)
+
+    # Use awk to replace the line
+    awk -v name="$var_name" -v value="$var_value" '
+        BEGIN { FS="="; OFS="=" }
+        $1 == name { print name, value; next }
+        { print }
+    ' "$env_file" > "$tmp_file"
+
+    # Move temp file to .env
+    mv "$tmp_file" "$env_file"
+}
+
 # Check if .env exists
 if [ ! -f .env ]; then
     if [ -f .env.example ]; then
@@ -56,10 +76,12 @@ if [ ! -f .env ]; then
     fi
 fi
 
-# Load environment
+# Load environment (handle errors gracefully)
+set +e
 set -a
-source .env
+source .env 2>/dev/null
 set +a
+set -e
 
 echo ""
 echo "Checking and generating secrets..."
@@ -71,7 +93,7 @@ CHANGES_MADE=false
 # Generate POSTGRES_PASSWORD if not set or is placeholder
 if [ -z "$POSTGRES_PASSWORD" ] || [[ "$POSTGRES_PASSWORD" == *"CHANGE_ME"* ]] || [[ "$POSTGRES_PASSWORD" == *"change-this"* ]]; then
     NEW_POSTGRES_PASSWORD=$(generate_secret 32)
-    sed -i.bak "s|^POSTGRES_PASSWORD=.*|POSTGRES_PASSWORD=$NEW_POSTGRES_PASSWORD|" .env
+    update_env_var "POSTGRES_PASSWORD" "$NEW_POSTGRES_PASSWORD"
     POSTGRES_PASSWORD=$NEW_POSTGRES_PASSWORD
     echo -e "${GREEN}[Generated]${NC} POSTGRES_PASSWORD"
     CHANGES_MADE=true
@@ -82,7 +104,7 @@ fi
 # Generate JWT_SECRET if not set or is placeholder
 if [ -z "$JWT_SECRET" ] || [[ "$JWT_SECRET" == *"CHANGE_ME"* ]] || [[ "$JWT_SECRET" == *"generate"* ]]; then
     NEW_JWT_SECRET=$(generate_secret 32)
-    sed -i.bak "s|^JWT_SECRET=.*|JWT_SECRET=$NEW_JWT_SECRET|" .env
+    update_env_var "JWT_SECRET" "$NEW_JWT_SECRET"
     JWT_SECRET=$NEW_JWT_SECRET
     echo -e "${GREEN}[Generated]${NC} JWT_SECRET"
     CHANGES_MADE=true
@@ -93,7 +115,7 @@ fi
 # Generate SECRET_KEY_BASE if not set or is placeholder
 if [ -z "$SECRET_KEY_BASE" ] || [[ "$SECRET_KEY_BASE" == *"CHANGE_ME"* ]] || [[ "$SECRET_KEY_BASE" == *"generate"* ]]; then
     NEW_SECRET_KEY_BASE=$(generate_secret 64)
-    sed -i.bak "s|^SECRET_KEY_BASE=.*|SECRET_KEY_BASE=$NEW_SECRET_KEY_BASE|" .env
+    update_env_var "SECRET_KEY_BASE" "$NEW_SECRET_KEY_BASE"
     SECRET_KEY_BASE=$NEW_SECRET_KEY_BASE
     echo -e "${GREEN}[Generated]${NC} SECRET_KEY_BASE"
     CHANGES_MADE=true
@@ -104,7 +126,7 @@ fi
 # Generate ANON_KEY if not set or is placeholder
 if [ -z "$ANON_KEY" ] || [[ "$ANON_KEY" == *"CHANGE_ME"* ]] || [[ "$ANON_KEY" == *"your-"* ]]; then
     NEW_ANON_KEY=$(generate_jwt "anon" "$JWT_SECRET")
-    sed -i.bak "s|^ANON_KEY=.*|ANON_KEY=$NEW_ANON_KEY|" .env
+    update_env_var "ANON_KEY" "$NEW_ANON_KEY"
     ANON_KEY=$NEW_ANON_KEY
     echo -e "${GREEN}[Generated]${NC} ANON_KEY (JWT with role=anon)"
     CHANGES_MADE=true
@@ -115,7 +137,7 @@ fi
 # Generate SERVICE_ROLE_KEY if not set or is placeholder
 if [ -z "$SERVICE_ROLE_KEY" ] || [[ "$SERVICE_ROLE_KEY" == *"CHANGE_ME"* ]] || [[ "$SERVICE_ROLE_KEY" == *"your-"* ]]; then
     NEW_SERVICE_ROLE_KEY=$(generate_jwt "service_role" "$JWT_SECRET")
-    sed -i.bak "s|^SERVICE_ROLE_KEY=.*|SERVICE_ROLE_KEY=$NEW_SERVICE_ROLE_KEY|" .env
+    update_env_var "SERVICE_ROLE_KEY" "$NEW_SERVICE_ROLE_KEY"
     SERVICE_ROLE_KEY=$NEW_SERVICE_ROLE_KEY
     echo -e "${GREEN}[Generated]${NC} SERVICE_ROLE_KEY (JWT with role=service_role)"
     CHANGES_MADE=true
@@ -125,21 +147,20 @@ fi
 
 # Also update PUBLIC_SUPABASE_ANON_KEY and SUPABASE_SERVICE_ROLE_KEY if they exist
 if grep -q "^PUBLIC_SUPABASE_ANON_KEY=" .env; then
-    sed -i.bak "s|^PUBLIC_SUPABASE_ANON_KEY=.*|PUBLIC_SUPABASE_ANON_KEY=$ANON_KEY|" .env
+    update_env_var "PUBLIC_SUPABASE_ANON_KEY" "\${ANON_KEY}"
 fi
 if grep -q "^SUPABASE_SERVICE_ROLE_KEY=" .env; then
-    sed -i.bak "s|^SUPABASE_SERVICE_ROLE_KEY=.*|SUPABASE_SERVICE_ROLE_KEY=$SERVICE_ROLE_KEY|" .env
+    update_env_var "SUPABASE_SERVICE_ROLE_KEY" "\${SERVICE_ROLE_KEY}"
 fi
 
-# Clean up backup files
-rm -f .env.bak
-
 echo ""
 
 # Reload environment after changes
+set +e
 set -a
-source .env
+source .env 2>/dev/null
 set +a
+set -e
 
 # Validate required variables
 echo "Validating required variables..."
@@ -177,7 +198,6 @@ echo ""
 
 # Check for optional but recommended variables
 OPTIONAL_VARS=(
-    "ACME_EMAIL"
     "SMTP_HOST"
     "SMTP_USER"
 )
@@ -201,10 +221,14 @@ if [ ! -f kong.yml.template ]; then
     exit 1
 fi
 
-# Use sed to replace placeholders
-sed -e "s|__ANON_KEY__|$ANON_KEY|g" \
-    -e "s|__SERVICE_ROLE_KEY__|$SERVICE_ROLE_KEY|g" \
-    kong.yml.template > kong.yml
+# Use awk to replace placeholders (more robust than sed for complex strings)
+awk -v anon_key="$ANON_KEY" -v service_key="$SERVICE_ROLE_KEY" '
+{
+    gsub(/__ANON_KEY__/, anon_key)
+    gsub(/__SERVICE_ROLE_KEY__/, service_key)
+    print
+}
+' kong.yml.template > kong.yml
 
 echo -e "${GREEN}Generated kong.yml with API keys.${NC}"
 echo ""