diff --git a/src/backend/database/db/index.ts b/src/backend/database/db/index.ts
index fab88f92..1d2205ab 100644
--- a/src/backend/database/db/index.ts
+++ b/src/backend/database/db/index.ts
@@ -422,6 +422,11 @@ const migrateSchema = () => {
   addColumnIfNotExists("users", "totp_enabled", "INTEGER NOT NULL DEFAULT 0");
   addColumnIfNotExists("users", "totp_backup_codes", "TEXT");
 
+  // Password recovery fields (UX compromise - breaks zero-trust for usability)
+  addColumnIfNotExists("users", "recovery_dek", "TEXT");
+  addColumnIfNotExists("users", "backup_encrypted_dek", "TEXT");
+  addColumnIfNotExists("users", "zero_trust_mode", "INTEGER NOT NULL DEFAULT 0");
+
   addColumnIfNotExists("ssh_data", "name", "TEXT");
   addColumnIfNotExists("ssh_data", "folder", "TEXT");
   addColumnIfNotExists("ssh_data", "tags", "TEXT");
diff --git a/src/backend/database/db/schema.ts b/src/backend/database/db/schema.ts
index 8e0f8e79..16cdac05 100644
--- a/src/backend/database/db/schema.ts
+++ b/src/backend/database/db/schema.ts
@@ -23,6 +23,13 @@ export const users = sqliteTable("users", {
     .notNull()
     .default(false),
   totp_backup_codes: text("totp_backup_codes"),
+
+  // Password recovery fields (breaks zero-trust for UX)
+  recovery_dek: text("recovery_dek"),                    // Recovery DEK stored in plaintext
+  backup_encrypted_dek: text("backup_encrypted_dek"),   // DEK encrypted with recovery DEK
+  zero_trust_mode: integer("zero_trust_mode", { mode: "boolean" })
+    .notNull()
+    .default(false),                                     // false=compromise mode, true=zero-trust mode
 });
 
 export const settings = sqliteTable("settings", {
diff --git a/src/backend/database/routes/users.ts b/src/backend/database/routes/users.ts
index 5ed51780..8820ee68 100644
--- a/src/backend/database/routes/users.ts
+++ b/src/backend/database/routes/users.ts
@@ -1,4 +1,5 @@
 import express from "express";
+import crypto from "crypto";
 import { db } from "../db/index.js";
 import {
   users,
@@ -20,6 +21,7 @@ import { authLogger, apiLogger } from "../../utils/logger.js";
 import { AuthManager } from "../../utils/auth-manager.js";
 import { UserCrypto } from "../../utils/user-crypto.js";
 import { DataCrypto } from "../../utils/data-crypto.js";
+import { ZeroTrustMigration } from "../../utils/zero-trust-migration.js";
 
 // Get auth manager instance
 const authManager = AuthManager.getInstance();
@@ -1252,13 +1254,86 @@ router.post("/complete-reset", async (req, res) => {
       return res.status(400).json({ error: "Invalid temporary token" });
     }
 
-    const saltRounds = parseInt(process.env.SALT || "10", 10);
-    const password_hash = await bcrypt.hash(newPassword, saltRounds);
+    // Get user ID for KEK-DEK operations
+    const user = await db.select().from(users).where(eq(users.username, username));
+    if (!user || user.length === 0) {
+      return res.status(404).json({ error: "User not found" });
+    }
+    const userId = user[0].id;
 
-    await db
-      .update(users)
-      .set({ password_hash })
-      .where(eq(users.username, username));
+    // 🔥 CRITICAL FIX: Use recovery DEK to preserve user data
+    if (user[0].recovery_dek && user[0].backup_encrypted_dek) {
+      try {
+        const userCrypto = UserCrypto.getInstance();
+
+        // Decrypt DEK using recovery key
+        const recoveryDEK = Buffer.from(user[0].recovery_dek, 'hex');
+        const backupEncryptedDEK = JSON.parse(user[0].backup_encrypted_dek);
+        const originalDEK = (userCrypto as any).decryptDEK(backupEncryptedDEK, recoveryDEK);
+
+        // Generate new KEK with new password
+        const newKekSalt = await (userCrypto as any).generateKEKSalt();
+        const newKEK = (userCrypto as any).deriveKEK(newPassword, newKekSalt);
+        const newEncryptedDEK = (userCrypto as any).encryptDEK(originalDEK, newKEK);
+
+        // Update password hash
+        const saltRounds = parseInt(process.env.SALT || "10", 10);
+        const password_hash = await bcrypt.hash(newPassword, saltRounds);
+
+        // Update everything atomically
+        await (userCrypto as any).storeKEKSalt(userId, newKekSalt);
+        await (userCrypto as any).storeEncryptedDEK(userId, newEncryptedDEK);
+        await db
+          .update(users)
+          .set({ password_hash })
+          .where(eq(users.username, username));
+
+        // Update recovery data for new password
+        const newRecoveryDEK = crypto.randomBytes(32);
+        const newBackupEncryptedDEK = (userCrypto as any).encryptDEK(originalDEK, newRecoveryDEK);
+        await db
+          .update(users)
+          .set({
+            recovery_dek: newRecoveryDEK.toString('hex'),
+            backup_encrypted_dek: JSON.stringify(newBackupEncryptedDEK),
+          })
+          .where(eq(users.id, userId));
+
+        // Clean sensitive data
+        originalDEK.fill(0);
+        newKEK.fill(0);
+        newRecoveryDEK.fill(0);
+
+        authLogger.success("Password reset with KEK-DEK re-encryption successful", {
+          operation: "password_reset_with_kek_dek",
+          username,
+          userId,
+        });
+      } catch (error) {
+        authLogger.error("Failed to re-encrypt KEK-DEK during password reset", error, {
+          operation: "password_reset_kek_dek_failed",
+          username,
+        });
+        return res.status(500).json({
+          error: "Failed to preserve encrypted data during password reset"
+        });
+      }
+    } else {
+      // Fallback: No recovery data available - user will lose encrypted data
+      const saltRounds = parseInt(process.env.SALT || "10", 10);
+      const password_hash = await bcrypt.hash(newPassword, saltRounds);
+
+      await db
+        .update(users)
+        .set({ password_hash })
+        .where(eq(users.username, username));
+
+      authLogger.warn("Password reset without KEK-DEK preservation - encrypted data may be lost", {
+        operation: "password_reset_no_recovery",
+        username,
+        userId,
+      });
+    }
 
     db.$client
       .prepare("DELETE FROM settings WHERE key = ?")
@@ -1932,4 +2007,378 @@ router.get("/security-status", authenticateJWT, async (req, res) => {
   }
 });
 
+// ===== Password Recovery API endpoints (UX compromise) =====
+
+// Route: Request recovery code (outputs to Docker logs)
+// POST /users/recovery/request
+router.post("/recovery/request", async (req, res) => {
+  const { username } = req.body;
+
+  if (!isNonEmptyString(username)) {
+    return res.status(400).json({ error: "Username is required" });
+  }
+
+  try {
+    // Check if user exists
+    const user = await db
+      .select()
+      .from(users)
+      .where(eq(users.username, username));
+
+    if (!user || user.length === 0) {
+      return res.status(404).json({ error: "User not found" });
+    }
+
+    // Check if user has recovery data
+    if (!user[0].recovery_dek) {
+      return res.status(400).json({
+        error: "Recovery not available for this user"
+      });
+    }
+
+    // Generate 6-digit recovery code
+    const recoveryCode = Math.floor(100000 + Math.random() * 900000).toString();
+    const expiresAt = Date.now() + 60 * 1000; // 1 minute expiry
+
+    // Store recovery code in settings
+    const key = `recovery_code_${username}`;
+    const value = JSON.stringify({
+      code: recoveryCode,
+      expiresAt,
+      attempts: 0
+    });
+
+    const existing = await db.select().from(settings).where(eq(settings.key, key));
+    if (existing.length > 0) {
+      await db.update(settings).set({ value }).where(eq(settings.key, key));
+    } else {
+      await db.insert(settings).values({ key, value });
+    }
+
+    // 🔥 Output to Docker logs for physical access verification
+    console.log(`[RECOVERY] Code for user '${username}': ${recoveryCode} (expires in 60s)`);
+
+    authLogger.info("Recovery code generated", {
+      operation: "recovery_code_generated",
+      username,
+      expiresAt,
+    });
+
+    res.json({
+      message: "Recovery code sent to system logs",
+      instruction: "Use 'docker logs termix | grep RECOVERY' to view the code"
+    });
+
+  } catch (error) {
+    authLogger.error("Failed to generate recovery code", error, {
+      operation: "recovery_request_failed",
+      username,
+    });
+    res.status(500).json({ error: "Failed to generate recovery code" });
+  }
+});
+
+// Route: Verify recovery code and auto-decrypt user data
+// POST /users/recovery/verify
+router.post("/recovery/verify", async (req, res) => {
+  const { username, code } = req.body;
+
+  if (!isNonEmptyString(username) || !isNonEmptyString(code)) {
+    return res.status(400).json({
+      error: "Username and recovery code are required"
+    });
+  }
+
+  try {
+    // Get and verify recovery code
+    const key = `recovery_code_${username}`;
+    const result = await db.select().from(settings).where(eq(settings.key, key));
+
+    if (result.length === 0) {
+      return res.status(400).json({ error: "No recovery code found" });
+    }
+
+    const codeData = JSON.parse(result[0].value);
+    const now = Date.now();
+
+    // Check expiry
+    if (now > codeData.expiresAt) {
+      await db.delete(settings).where(eq(settings.key, key));
+      return res.status(400).json({ error: "Recovery code has expired" });
+    }
+
+    // Check attempts (prevent brute force)
+    if (codeData.attempts >= 3) {
+      await db.delete(settings).where(eq(settings.key, key));
+      return res.status(400).json({ error: "Too many attempts" });
+    }
+
+    // Verify code
+    if (codeData.code !== code) {
+      // Increment attempts
+      codeData.attempts++;
+      await db.update(settings)
+        .set({ value: JSON.stringify(codeData) })
+        .where(eq(settings.key, key));
+
+      return res.status(400).json({ error: "Invalid recovery code" });
+    }
+
+    // Get user data
+    const user = await db
+      .select()
+      .from(users)
+      .where(eq(users.username, username));
+
+    if (!user[0].recovery_dek || !user[0].backup_encrypted_dek) {
+      return res.status(400).json({ error: "Recovery data not available" });
+    }
+
+    // 🔥 Auto-decrypt using recovery DEK
+    const userCrypto = UserCrypto.getInstance();
+    const recoveryDEK = Buffer.from(user[0].recovery_dek, 'hex');
+    const backupEncryptedDEK = JSON.parse(user[0].backup_encrypted_dek);
+
+    try {
+      // Decrypt original DEK using recovery key
+      const originalDEK = (userCrypto as any).decryptDEK(backupEncryptedDEK, recoveryDEK);
+
+      // Create user session with decrypted DEK
+      const tempToken = crypto.randomBytes(32).toString('hex');
+      const expiresAt = Date.now() + 5 * 60 * 1000; // 5 minutes
+
+      // Store temporary session
+      const tempKey = `temp_recovery_session_${username}`;
+      const tempValue = JSON.stringify({
+        userId: user[0].id,
+        tempToken,
+        expiresAt,
+        dekHex: originalDEK.toString('hex')
+      });
+
+      const existingTemp = await db.select().from(settings).where(eq(settings.key, tempKey));
+      if (existingTemp.length > 0) {
+        await db.update(settings).set({ value: tempValue }).where(eq(settings.key, tempKey));
+      } else {
+        await db.insert(settings).values({ key: tempKey, value: tempValue });
+      }
+
+      // Clean up recovery code
+      await db.delete(settings).where(eq(settings.key, key));
+
+      authLogger.success("Recovery verification successful", {
+        operation: "recovery_verify_success",
+        username,
+        userId: user[0].id,
+      });
+
+      res.json({
+        success: true,
+        tempToken,
+        expiresAt,
+        message: "Recovery successful. You can now login normally.",
+      });
+
+    } catch (decryptError) {
+      authLogger.error("Failed to decrypt recovery data", decryptError, {
+        operation: "recovery_decrypt_failed",
+        username,
+      });
+      res.status(500).json({ error: "Failed to decrypt user data" });
+    }
+
+  } catch (error) {
+    authLogger.error("Recovery verification failed", error, {
+      operation: "recovery_verify_failed",
+      username,
+    });
+    res.status(500).json({ error: "Recovery verification failed" });
+  }
+});
+
+// Route: Login with recovery session (temporary login after recovery)
+// POST /users/recovery/login
+router.post("/recovery/login", async (req, res) => {
+  const { username, tempToken } = req.body;
+
+  if (!isNonEmptyString(username) || !isNonEmptyString(tempToken)) {
+    return res.status(400).json({
+      error: "Username and temporary token are required"
+    });
+  }
+
+  try {
+    // Get temporary session
+    const tempKey = `temp_recovery_session_${username}`;
+    const result = await db.select().from(settings).where(eq(settings.key, tempKey));
+
+    if (result.length === 0) {
+      return res.status(400).json({ error: "Invalid recovery session" });
+    }
+
+    const sessionData = JSON.parse(result[0].value);
+    const now = Date.now();
+
+    // Check expiry
+    if (now > sessionData.expiresAt) {
+      await db.delete(settings).where(eq(settings.key, tempKey));
+      return res.status(400).json({ error: "Recovery session has expired" });
+    }
+
+    // Verify token
+    if (sessionData.tempToken !== tempToken) {
+      return res.status(400).json({ error: "Invalid temporary token" });
+    }
+
+    // Get user
+    const user = await db.select().from(users).where(eq(users.id, sessionData.userId));
+    if (!user || user.length === 0) {
+      return res.status(404).json({ error: "User not found" });
+    }
+
+    // Create DEK session for user
+    const userCrypto = UserCrypto.getInstance();
+    const originalDEK = Buffer.from(sessionData.dekHex, 'hex');
+
+    // Set user session directly (bypass normal auth)
+    const sessionExpiry = Date.now() + 2 * 60 * 60 * 1000; // 2 hours
+    (userCrypto as any).userSessions.set(sessionData.userId, {
+      dataKey: originalDEK,
+      lastActivity: Date.now(),
+      expiresAt: sessionExpiry,
+    });
+
+    // Generate JWT token
+    const token = await authManager.generateJWTToken(sessionData.userId, {
+      expiresIn: "2h",
+    });
+
+    // Clean up temporary session
+    await db.delete(settings).where(eq(settings.key, tempKey));
+
+    authLogger.success("Recovery login successful", {
+      operation: "recovery_login_success",
+      username,
+      userId: sessionData.userId,
+    });
+
+    res.json({
+      token,
+      is_admin: !!user[0].is_admin,
+      username: user[0].username,
+      message: "Login successful via recovery"
+    });
+
+  } catch (error) {
+    authLogger.error("Recovery login failed", error, {
+      operation: "recovery_login_failed",
+      username,
+    });
+    res.status(500).json({ error: "Recovery login failed" });
+  }
+});
+
+// ===== Zero Trust Migration API endpoints =====
+
+// Route: Get user security mode status
+// GET /users/security-mode
+router.get("/security-mode", authenticateJWT, async (req, res) => {
+  const userId = (req as any).userId;
+
+  try {
+    const migration = ZeroTrustMigration.getInstance();
+    const status = await migration.getUserSecurityMode(userId);
+
+    res.json(status);
+  } catch (error) {
+    authLogger.error("Failed to get security mode", error, {
+      operation: "get_security_mode_failed",
+      userId,
+    });
+    res.status(500).json({ error: "Failed to get security mode" });
+  }
+});
+
+// Route: Migrate user to zero-trust mode
+// POST /users/migrate-to-zero-trust
+router.post("/migrate-to-zero-trust", authenticateJWT, async (req, res) => {
+  const userId = (req as any).userId;
+
+  try {
+    const migration = ZeroTrustMigration.getInstance();
+
+    // Check if user can migrate
+    const canMigrate = await migration.canMigrateToZeroTrust(userId);
+    if (!canMigrate) {
+      return res.status(400).json({
+        error: "User cannot migrate to zero-trust mode"
+      });
+    }
+
+    // Perform migration
+    const recoverySeed = await migration.migrateUserToZeroTrust(userId);
+    if (!recoverySeed) {
+      return res.status(500).json({
+        error: "Migration failed"
+      });
+    }
+
+    authLogger.success("User migrated to zero-trust mode", {
+      operation: "zero_trust_migration_success",
+      userId,
+    });
+
+    res.json({
+      success: true,
+      recoverySeed,
+      message: "Migration successful. Save this recovery seed securely!",
+      warning: "This is the only time you will see this seed. Store it safely!"
+    });
+
+  } catch (error) {
+    authLogger.error("Zero-trust migration failed", error, {
+      operation: "zero_trust_migration_error",
+      userId,
+    });
+    res.status(500).json({ error: "Migration failed" });
+  }
+});
+
+// Route: Zero-trust password recovery (requires user seed)
+// POST /users/recovery/zero-trust
+router.post("/recovery/zero-trust", async (req, res) => {
+  const { username, code, userSeed } = req.body;
+
+  if (!username || !code || !userSeed) {
+    return res.status(400).json({
+      error: "Username, recovery code, and user seed are required"
+    });
+  }
+
+  try {
+    const migration = ZeroTrustMigration.getInstance();
+    const result = await migration.recoverInZeroTrustMode(username, code, userSeed);
+
+    if (result.success) {
+      res.json({
+        success: true,
+        tempToken: result.tempToken,
+        expiresAt: result.expiresAt,
+        message: "Zero-trust recovery successful"
+      });
+    } else {
+      res.status(400).json({
+        error: "Recovery failed. Check your code and recovery seed."
+      });
+    }
+
+  } catch (error) {
+    authLogger.error("Zero-trust recovery failed", error, {
+      operation: "zero_trust_recovery_error",
+      username,
+    });
+    res.status(500).json({ error: "Recovery failed" });
+  }
+});
+
 export default router;
diff --git a/src/backend/utils/user-crypto.ts b/src/backend/utils/user-crypto.ts
index c0d181c7..66b961ce 100644
--- a/src/backend/utils/user-crypto.ts
+++ b/src/backend/utils/user-crypto.ts
@@ -1,6 +1,6 @@
 import crypto from "crypto";
 import { getDb } from "../database/db/index.js";
-import { settings } from "../database/db/schema.js";
+import { settings, users } from "../database/db/schema.js";
 import { eq } from "drizzle-orm";
 import { databaseLogger } from "./logger.js";
 
@@ -71,13 +71,20 @@ class UserCrypto {
     const encryptedDEK = this.encryptDEK(DEK, KEK);
     await this.storeEncryptedDEK(userId, encryptedDEK);
 
+    // 🔴 Add recovery layer (breaks zero-trust for UX)
+    const recoveryDEK = crypto.randomBytes(UserCrypto.DEK_LENGTH);
+    const backupEncryptedDEK = this.encryptDEK(DEK, recoveryDEK);
+    await this.storeRecoveryData(userId, recoveryDEK, backupEncryptedDEK);
+
     // Immediately clean temporary keys
     KEK.fill(0);
     DEK.fill(0);
+    recoveryDEK.fill(0);
 
-    databaseLogger.success("User encryption setup completed", {
+    databaseLogger.success("User encryption setup completed with recovery layer", {
       operation: "user_crypto_setup",
       userId,
+      recoveryEnabled: true,
     });
   }
 
@@ -403,6 +410,34 @@ class UserCrypto {
       return null;
     }
   }
+
+  /**
+   * Store recovery data (breaks zero-trust for UX compromise)
+   */
+  private async storeRecoveryData(userId: string, recoveryDEK: Buffer, backupEncryptedDEK: EncryptedDEK): Promise<void> {
+    try {
+      await getDb()
+        .update(users)
+        .set({
+          recovery_dek: recoveryDEK.toString('hex'),
+          backup_encrypted_dek: JSON.stringify(backupEncryptedDEK),
+          zero_trust_mode: false, // Compromise mode for UX
+        })
+        .where(eq(users.id, userId));
+
+      databaseLogger.info("Recovery data stored for user", {
+        operation: "store_recovery_data",
+        userId,
+        mode: "compromise",
+      });
+    } catch (error) {
+      databaseLogger.error("Failed to store recovery data", error, {
+        operation: "store_recovery_data_failed",
+        userId,
+      });
+      throw error;
+    }
+  }
 }
 
 export { UserCrypto, type KEKSalt, type EncryptedDEK };
\ No newline at end of file
diff --git a/src/backend/utils/zero-trust-migration.ts b/src/backend/utils/zero-trust-migration.ts
new file mode 100644
index 00000000..b03e36db
--- /dev/null
+++ b/src/backend/utils/zero-trust-migration.ts
@@ -0,0 +1,264 @@
+import crypto from "crypto";
+import { getDb } from "../database/db/index.js";
+import { users, settings } from "../database/db/schema.js";
+import { eq } from "drizzle-orm";
+import { databaseLogger } from "./logger.js";
+import { UserCrypto, type EncryptedDEK } from "./user-crypto.js";
+
+/**
+ * ZeroTrustMigration - Handle migration between compromise and zero-trust modes
+ *
+ * Linus principles:
+ * - Simple migration path with clear rollback capability
+ * - User controls the security tradeoff
+ * - Future-proof architecture for security upgrades
+ */
+export class ZeroTrustMigration {
+  private static instance: ZeroTrustMigration;
+
+  private constructor() {}
+
+  static getInstance(): ZeroTrustMigration {
+    if (!this.instance) {
+      this.instance = new ZeroTrustMigration();
+    }
+    return this.instance;
+  }
+
+  /**
+   * Check if user can migrate to zero-trust mode
+   */
+  async canMigrateToZeroTrust(userId: string): Promise<boolean> {
+    try {
+      const db = getDb();
+      const user = await db.select().from(users).where(eq(users.id, userId));
+
+      if (!user || user.length === 0) {
+        return false;
+      }
+
+      // Must have recovery data and be in compromise mode
+      return !!(user[0].recovery_dek && !user[0].zero_trust_mode);
+    } catch (error) {
+      databaseLogger.error("Failed to check zero-trust migration eligibility", error, {
+        operation: "zero_trust_check_failed",
+        userId,
+      });
+      return false;
+    }
+  }
+
+  /**
+   * Migrate user to zero-trust mode
+   * Returns recovery seed for user to save
+   */
+  async migrateUserToZeroTrust(userId: string): Promise<string | null> {
+    try {
+      const db = getDb();
+      const user = await db.select().from(users).where(eq(users.id, userId));
+
+      if (!user || user.length === 0) {
+        throw new Error("User not found");
+      }
+
+      const userData = user[0];
+      if (!userData.recovery_dek || !userData.backup_encrypted_dek) {
+        throw new Error("No recovery data available");
+      }
+
+      if (userData.zero_trust_mode) {
+        throw new Error("User already in zero-trust mode");
+      }
+
+      // Generate user recovery seed (256-bit)
+      const userRecoverySeed = crypto.randomBytes(32).toString('hex');
+
+      // Get current DEK from plaintext recovery data
+      const userCrypto = UserCrypto.getInstance();
+      const recoveryDEK = Buffer.from(userData.recovery_dek, 'hex');
+      const backupEncryptedDEK = JSON.parse(userData.backup_encrypted_dek);
+      const originalDEK = (userCrypto as any).decryptDEK(backupEncryptedDEK, recoveryDEK);
+
+      // Create user recovery key from seed
+      const userRecoveryKey = crypto.pbkdf2Sync(
+        userRecoverySeed,
+        'zero_trust_recovery',
+        100000,
+        32,
+        'sha256'
+      );
+
+      // Re-encrypt DEK with user recovery key
+      const newBackupEncryptedDEK = (userCrypto as any).encryptDEK(originalDEK, userRecoveryKey);
+
+      // 🔥 Remove plaintext recovery data and enable zero-trust mode
+      await db
+        .update(users)
+        .set({
+          recovery_dek: null,                           // Delete plaintext recovery key
+          backup_encrypted_dek: JSON.stringify(newBackupEncryptedDEK),
+          zero_trust_mode: true,                        // Enable zero-trust mode
+        })
+        .where(eq(users.id, userId));
+
+      databaseLogger.success("User migrated to zero-trust mode", {
+        operation: "zero_trust_migration_success",
+        userId,
+        mode: "zero_trust",
+      });
+
+      return userRecoverySeed;
+
+    } catch (error) {
+      databaseLogger.error("Failed to migrate user to zero-trust", error, {
+        operation: "zero_trust_migration_failed",
+        userId,
+      });
+      throw error;
+    }
+  }
+
+  /**
+   * Zero-trust recovery (requires user recovery seed)
+   */
+  async recoverInZeroTrustMode(
+    username: string,
+    code: string,
+    userSeed: string
+  ): Promise<{ success: boolean; tempToken?: string; expiresAt?: number }> {
+    try {
+      const db = getDb();
+
+      // Verify recovery code (same mechanism as compromise mode)
+      const key = `recovery_code_${username}`;
+      const result = await db.select().from(settings).where(eq(settings.key, key));
+
+      if (result.length === 0) {
+        return { success: false };
+      }
+
+      const codeData = JSON.parse(result[0].value);
+      const now = Date.now();
+
+      // Check expiry and attempts
+      if (now > codeData.expiresAt || codeData.attempts >= 3) {
+        await db.delete(settings).where(eq(settings.key, key));
+        return { success: false };
+      }
+
+      // Verify code
+      if (codeData.code !== code) {
+        codeData.attempts++;
+        await db.update(settings)
+          .set({ value: JSON.stringify(codeData) })
+          .where(eq(settings.key, key));
+        return { success: false };
+      }
+
+      // Get user
+      const user = await db.select().from(users).where(eq(users.username, username));
+      if (!user || user.length === 0) {
+        return { success: false };
+      }
+
+      const userData = user[0];
+      if (!userData.zero_trust_mode || !userData.backup_encrypted_dek) {
+        return { success: false };
+      }
+
+      // Derive user recovery key from seed
+      const userRecoveryKey = crypto.pbkdf2Sync(
+        userSeed,
+        'zero_trust_recovery',
+        100000,
+        32,
+        'sha256'
+      );
+
+      try {
+        // Decrypt DEK using user recovery key
+        const userCrypto = UserCrypto.getInstance();
+        const backupEncryptedDEK = JSON.parse(userData.backup_encrypted_dek);
+        const originalDEK = (userCrypto as any).decryptDEK(backupEncryptedDEK, userRecoveryKey);
+
+        // Create temporary session
+        const tempToken = crypto.randomBytes(32).toString('hex');
+        const expiresAt = Date.now() + 5 * 60 * 1000; // 5 minutes
+
+        const tempKey = `temp_recovery_session_${username}`;
+        const tempValue = JSON.stringify({
+          userId: userData.id,
+          tempToken,
+          expiresAt,
+          dekHex: originalDEK.toString('hex'),
+          mode: 'zero_trust'
+        });
+
+        const existingTemp = await db.select().from(settings).where(eq(settings.key, tempKey));
+        if (existingTemp.length > 0) {
+          await db.update(settings).set({ value: tempValue }).where(eq(settings.key, tempKey));
+        } else {
+          await db.insert(settings).values({ key: tempKey, value: tempValue });
+        }
+
+        // Clean up recovery code
+        await db.delete(settings).where(eq(settings.key, key));
+
+        databaseLogger.success("Zero-trust recovery successful", {
+          operation: "zero_trust_recovery_success",
+          username,
+          userId: userData.id,
+        });
+
+        return { success: true, tempToken, expiresAt };
+
+      } catch (decryptError) {
+        // Invalid seed - decryption failed
+        databaseLogger.warn("Zero-trust recovery failed - invalid seed", {
+          operation: "zero_trust_recovery_invalid_seed",
+          username,
+        });
+        return { success: false };
+      }
+
+    } catch (error) {
+      databaseLogger.error("Zero-trust recovery failed", error, {
+        operation: "zero_trust_recovery_error",
+        username,
+      });
+      return { success: false };
+    }
+  }
+
+  /**
+   * Get user security mode status
+   */
+  async getUserSecurityMode(userId: string): Promise<{
+    mode: 'compromise' | 'zero_trust';
+    canMigrate: boolean;
+    hasRecoveryData: boolean;
+  }> {
+    try {
+      const db = getDb();
+      const user = await db.select().from(users).where(eq(users.id, userId));
+
+      if (!user || user.length === 0) {
+        return { mode: 'compromise', canMigrate: false, hasRecoveryData: false };
+      }
+
+      const userData = user[0];
+      const mode = userData.zero_trust_mode ? 'zero_trust' : 'compromise';
+      const hasRecoveryData = !!(userData.recovery_dek || userData.backup_encrypted_dek);
+      const canMigrate = mode === 'compromise' && hasRecoveryData;
+
+      return { mode, canMigrate, hasRecoveryData };
+
+    } catch (error) {
+      databaseLogger.error("Failed to get user security mode", error, {
+        operation: "get_security_mode_failed",
+        userId,
+      });
+      return { mode: 'compromise', canMigrate: false, hasRecoveryData: false };
+    }
+  }
+}
\ No newline at end of file
diff --git a/src/ui/Desktop/Homepage/HomepageAuth.tsx b/src/ui/Desktop/Homepage/HomepageAuth.tsx
index 3f8189b6..813529df 100644
--- a/src/ui/Desktop/Homepage/HomepageAuth.tsx
+++ b/src/ui/Desktop/Homepage/HomepageAuth.tsx
@@ -14,6 +14,9 @@ import {
   getRegistrationAllowed,
   getOIDCConfig,
   getSetupRequired,
+  requestRecoveryCode,
+  verifyRecoveryCode,
+  loginWithRecovery,
   initiatePasswordReset,
   verifyPasswordResetCode,
   completePasswordReset,
@@ -80,6 +83,16 @@ export function HomepageAuth({
   const [registrationAllowed, setRegistrationAllowed] = useState(true);
   const [oidcConfigured, setOidcConfigured] = useState(false);
 
+  // Recovery states (new UX compromise flow)
+  const [recoveryStep, setRecoveryStep] = useState<
+    "request" | "verify" | "login"
+  >("request");
+  const [recoveryCode, setRecoveryCode] = useState("");
+  const [recoveryTempToken, setRecoveryTempToken] = useState("");
+  const [recoveryLoading, setRecoveryLoading] = useState(false);
+  const [recoverySuccess, setRecoverySuccess] = useState(false);
+
+  // Legacy reset states (kept for compatibility)
   const [resetStep, setResetStep] = useState<
     "initiate" | "verify" | "newPassword"
   >("initiate");
@@ -248,6 +261,93 @@ export function HomepageAuth({
     }
   }
 
+  // ===== New Recovery Functions (UX compromise) =====
+
+  async function handleRequestRecoveryCode() {
+    setError(null);
+    setRecoveryLoading(true);
+    try {
+      const result = await requestRecoveryCode(localUsername);
+      setRecoveryStep("verify");
+      toast.success("Recovery code sent to Docker logs");
+    } catch (err: any) {
+      toast.error(
+        err?.response?.data?.error ||
+          err?.message ||
+          "Failed to request recovery code",
+      );
+    } finally {
+      setRecoveryLoading(false);
+    }
+  }
+
+  async function handleVerifyRecoveryCode() {
+    setError(null);
+    setRecoveryLoading(true);
+    try {
+      const response = await verifyRecoveryCode(localUsername, recoveryCode);
+      setRecoveryTempToken(response.tempToken);
+      setRecoveryStep("login");
+      toast.success("Recovery verification successful");
+    } catch (err: any) {
+      toast.error(err?.response?.data?.error || "Failed to verify recovery code");
+    } finally {
+      setRecoveryLoading(false);
+    }
+  }
+
+  async function handleRecoveryLogin() {
+    setError(null);
+    setRecoveryLoading(true);
+    try {
+      const response = await loginWithRecovery(localUsername, recoveryTempToken);
+
+      // Auto-login successful - use same cookie mechanism as normal login
+      setCookie("jwt", response.token);
+
+      // DEBUG: Verify JWT was set correctly (same as normal login)
+      const verifyJWT = getCookie("jwt");
+      console.log("Recovery JWT Set Debug:", {
+        originalToken: response.token.substring(0, 20) + "...",
+        retrievedToken: verifyJWT ? verifyJWT.substring(0, 20) + "..." : null,
+        match: response.token === verifyJWT,
+        tokenLength: response.token.length,
+        retrievedLength: verifyJWT?.length || 0
+      });
+
+      setLoggedIn(true);
+      setIsAdmin(response.is_admin);
+      setUsername(response.username);
+
+      onAuthSuccess({
+        isAdmin: response.is_admin,
+        username: response.username,
+        userId: response.userId || null,
+      });
+
+      // Reset recovery state
+      setRecoveryStep("request");
+      setRecoveryCode("");
+      setRecoveryTempToken("");
+      setRecoverySuccess(true);
+
+      toast.success("Login successful via recovery");
+    } catch (err: any) {
+      toast.error(err?.response?.data?.error || "Recovery login failed");
+    } finally {
+      setRecoveryLoading(false);
+    }
+  }
+
+  function resetRecoveryState() {
+    setRecoveryStep("request");
+    setRecoveryCode("");
+    setRecoveryTempToken("");
+    setError(null);
+  }
+
+  // ===== Legacy password reset functions (deprecated) =====
+
   async function handleInitiatePasswordReset() {
     setError(null);
     setResetLoading(true);
@@ -811,7 +911,131 @@ export function HomepageAuth({
                 )}
                 {tab === "reset" && (
                   <>
-                    {resetStep === "initiate" && (
+                    {/* New Recovery Flow (UX compromise) */}
+                    {recoveryStep === "request" && (
+                      <>
+                        <div className="text-center text-muted-foreground mb-4">
+                          <p>🔥 Password Recovery with Docker Access</p>
+                          <p className="text-sm mt-2">
+                            Recovery requires server access to view Docker logs
+                          </p>
+                        </div>
+                        <div className="flex flex-col gap-4">
+                          <div className="flex flex-col gap-2">
+                            <Label htmlFor="recovery-username">
+                              {t("common.username")}
+                            </Label>
+                            <Input
+                              id="recovery-username"
+                              type="text"
+                              required
+                              className="h-11 text-base"
+                              value={localUsername}
+                              onChange={(e) => setLocalUsername(e.target.value)}
+                              disabled={recoveryLoading}
+                            />
+                          </div>
+                          <Button
+                            type="button"
+                            className="w-full h-11 text-base font-semibold"
+                            disabled={recoveryLoading || !localUsername.trim()}
+                            onClick={handleRequestRecoveryCode}
+                          >
+                            {recoveryLoading ? Spinner : "Request Recovery Code"}
+                          </Button>
+                        </div>
+                      </>
+                    )}
+
+                    {recoveryStep === "verify" && (
+                      <>
+                        <div className="text-center text-muted-foreground mb-4">
+                          <p>
+                            Check Docker logs for recovery code for{" "}
+                            <strong>{localUsername}</strong>
+                          </p>
+                          <div className="mt-2 p-3 bg-gray-100 dark:bg-gray-800 rounded text-sm font-mono">
+                            docker logs termix | grep RECOVERY
+                          </div>
+                        </div>
+                        <div className="flex flex-col gap-4">
+                          <div className="flex flex-col gap-2">
+                            <Label htmlFor="recovery-code">
+                              Recovery Code (6 digits)
+                            </Label>
+                            <Input
+                              id="recovery-code"
+                              type="text"
+                              required
+                              maxLength={6}
+                              className="h-11 text-base text-center text-lg tracking-widest"
+                              value={recoveryCode}
+                              onChange={(e) =>
+                                setRecoveryCode(e.target.value.replace(/\D/g, ""))
+                              }
+                              disabled={recoveryLoading}
+                              placeholder="000000"
+                            />
+                          </div>
+                          <Button
+                            type="button"
+                            className="w-full h-11 text-base font-semibold"
+                            disabled={recoveryLoading || recoveryCode.length !== 6}
+                            onClick={handleVerifyRecoveryCode}
+                          >
+                            {recoveryLoading ? Spinner : "Verify & Unlock"}
+                          </Button>
+                          <Button
+                            type="button"
+                            variant="outline"
+                            className="w-full h-11 text-base font-semibold"
+                            disabled={recoveryLoading}
+                            onClick={() => {
+                              setRecoveryStep("request");
+                              setRecoveryCode("");
+                            }}
+                          >
+                            Back
+                          </Button>
+                        </div>
+                      </>
+                    )}
+
+                    {recoveryStep === "login" && (
+                      <>
+                        <div className="text-center text-muted-foreground mb-4">
+                          <p>✅ Recovery verification successful!</p>
+                          <p className="text-sm mt-2">
+                            Click below to complete login for{" "}
+                            <strong>{localUsername}</strong>
+                          </p>
+                        </div>
+                        <div className="flex flex-col gap-4">
+                          <Button
+                            type="button"
+                            className="w-full h-11 text-base font-semibold"
+                            disabled={recoveryLoading}
+                            onClick={handleRecoveryLogin}
+                          >
+                            {recoveryLoading ? Spinner : "Complete Login"}
+                          </Button>
+                          <Button
+                            type="button"
+                            variant="outline"
+                            className="w-full h-11 text-base font-semibold"
+                            disabled={recoveryLoading}
+                            onClick={() => {
+                              resetRecoveryState();
+                            }}
+                          >
+                            Start Over
+                          </Button>
+                        </div>
+                      </>
+                    )}
+
+                    {/* Legacy Reset Flow (kept for compatibility) */}
+                    {false && resetStep === "initiate" && (
                       <>
                         <div className="text-center text-muted-foreground mb-4">
                           <p>{t("auth.resetCodeDesc")}</p>
diff --git a/src/ui/main-axios.ts b/src/ui/main-axios.ts
index 9c5b6f86..326fdd11 100644
--- a/src/ui/main-axios.ts
+++ b/src/ui/main-axios.ts
@@ -1592,6 +1592,49 @@ export async function getUserCount(): Promise<UserCount> {
   }
 }
 
+// ===== New Recovery API functions (UX compromise) =====
+
+export async function requestRecoveryCode(username: string): Promise<any> {
+  try {
+    const response = await authApi.post("/users/recovery/request", { username });
+    return response.data;
+  } catch (error) {
+    handleApiError(error, "request recovery code");
+  }
+}
+
+export async function verifyRecoveryCode(
+  username: string,
+  code: string,
+): Promise<any> {
+  try {
+    const response = await authApi.post("/users/recovery/verify", {
+      username,
+      code,
+    });
+    return response.data;
+  } catch (error) {
+    handleApiError(error, "verify recovery code");
+  }
+}
+
+export async function loginWithRecovery(
+  username: string,
+  tempToken: string,
+): Promise<any> {
+  try {
+    const response = await authApi.post("/users/recovery/login", {
+      username,
+      tempToken,
+    });
+    return response.data;
+  } catch (error) {
+    handleApiError(error, "recovery login");
+  }
+}
+
+// ===== Legacy password reset functions (deprecated) =====
+
 export async function initiatePasswordReset(username: string): Promise<any> {
   try {
     const response = await authApi.post("/users/initiate-reset", { username });