diff --git a/backend/server/package-lock.json b/backend/server/package-lock.json
index dab4e32..31b4af6 100644
--- a/backend/server/package-lock.json
+++ b/backend/server/package-lock.json
@@ -12,7 +12,7 @@
         "concurrently": "^8.2.2",
         "cors": "^2.8.5",
         "dotenv": "^16.4.5",
-        "e2b": "^0.16.2-beta.47",
+        "e2b": "^1.0.5",
         "express": "^4.19.2",
         "jzip": "^1.0.0",
         "rate-limiter-flexible": "^5.0.3",
@@ -44,25 +44,25 @@
       }
     },
     "node_modules/@bufbuild/protobuf": {
-      "version": "1.10.0",
-      "resolved": "https://registry.npmjs.org/@bufbuild/protobuf/-/protobuf-1.10.0.tgz",
-      "integrity": "sha512-QDdVFLoN93Zjg36NoQPZfsVH9tZew7wKDKyV5qRdj8ntT4wQCOradQjRaTdwMhWUYsgKsvCINKKm87FdEk96Ag=="
+      "version": "2.2.2",
+      "resolved": "https://registry.npmjs.org/@bufbuild/protobuf/-/protobuf-2.2.2.tgz",
+      "integrity": "sha512-UNtPCbrwrenpmrXuRwn9jYpPoweNXj8X5sMvYgsqYyaH8jQ6LfUJSk3dJLnBK+6sfYPrF4iAIo5sd5HQ+tg75A=="
     },
     "node_modules/@connectrpc/connect": {
-      "version": "1.4.0",
-      "resolved": "https://registry.npmjs.org/@connectrpc/connect/-/connect-1.4.0.tgz",
-      "integrity": "sha512-vZeOkKaAjyV4+RH3+rJZIfDFJAfr+7fyYr6sLDKbYX3uuTVszhFe9/YKf5DNqrDb5cKdKVlYkGn6DTDqMitAnA==",
+      "version": "2.0.0-rc.3",
+      "resolved": "https://registry.npmjs.org/@connectrpc/connect/-/connect-2.0.0-rc.3.tgz",
+      "integrity": "sha512-ARBt64yEyKbanyRETTjcjJuHr2YXorzQo0etyS5+P6oSeW8xEuzajA9g+zDnMcj1hlX2dQE93foIWQGfpru7gQ==",
       "peerDependencies": {
-        "@bufbuild/protobuf": "^1.4.2"
+        "@bufbuild/protobuf": "^2.2.0"
       }
     },
     "node_modules/@connectrpc/connect-web": {
-      "version": "1.4.0",
-      "resolved": "https://registry.npmjs.org/@connectrpc/connect-web/-/connect-web-1.4.0.tgz",
-      "integrity": "sha512-13aO4psFbbm7rdOFGV0De2Za64DY/acMspgloDlcOKzLPPs0yZkhp1OOzAQeiAIr7BM/VOHIA3p8mF0inxCYTA==",
+      "version": "2.0.0-rc.3",
+      "resolved": "https://registry.npmjs.org/@connectrpc/connect-web/-/connect-web-2.0.0-rc.3.tgz",
+      "integrity": "sha512-w88P8Lsn5CCsA7MFRl2e6oLY4J/5toiNtJns/YJrlyQaWOy3RO8pDgkz+iIkG98RPMhj2thuBvsd3Cn4DKKCkw==",
       "peerDependencies": {
-        "@bufbuild/protobuf": "^1.4.2",
-        "@connectrpc/connect": "1.4.0"
+        "@bufbuild/protobuf": "^2.2.0",
+        "@connectrpc/connect": "2.0.0-rc.3"
       }
     },
     "node_modules/@cspotcode/source-map-support": {
@@ -783,13 +783,13 @@
       }
     },
     "node_modules/e2b": {
-      "version": "0.16.2-beta.47",
-      "resolved": "https://registry.npmjs.org/e2b/-/e2b-0.16.2-beta.47.tgz",
-      "integrity": "sha512-tMPDYLMD+8+JyLPrsWft3NHBhK5YKOFOXzKMwpOKR5KvXOkd1silkArDwplmBUzN/eG/uRzWdtHZs9mHUQ5b9g==",
+      "version": "1.0.5",
+      "resolved": "https://registry.npmjs.org/e2b/-/e2b-1.0.5.tgz",
+      "integrity": "sha512-0c2xqNQfVcVBmETsd1bXWCYaN3iVl7m81dJVcjB7O2/c15A7t0s/FkydcZGzVvfZchj40/1f09AdjGX6nk1eNQ==",
       "dependencies": {
-        "@bufbuild/protobuf": "^1.10.0",
-        "@connectrpc/connect": "^1.4.0",
-        "@connectrpc/connect-web": "^1.4.0",
+        "@bufbuild/protobuf": "^2.2.2",
+        "@connectrpc/connect": "2.0.0-rc.3",
+        "@connectrpc/connect-web": "2.0.0-rc.3",
         "compare-versions": "^6.1.0",
         "openapi-fetch": "^0.9.7",
         "platform": "^1.3.6"
diff --git a/backend/server/package.json b/backend/server/package.json
index ff093dc..2d09280 100644
--- a/backend/server/package.json
+++ b/backend/server/package.json
@@ -14,7 +14,7 @@
     "concurrently": "^8.2.2",
     "cors": "^2.8.5",
     "dotenv": "^16.4.5",
-    "e2b": "^0.16.2-beta.47",
+    "e2b": "^1.0.5",
     "express": "^4.19.2",
     "jzip": "^1.0.0",
     "rate-limiter-flexible": "^5.0.3",
diff --git a/backend/server/src/FileManager.ts b/backend/server/src/FileManager.ts
index 0022c1f..775313e 100644
--- a/backend/server/src/FileManager.ts
+++ b/backend/server/src/FileManager.ts
@@ -188,7 +188,7 @@ export class FileManager {
   // Watch a directory for changes
   async watchDirectory(directory: string): Promise<WatchHandle | undefined> {
     try {
-      const handle = await this.sandbox.files.watch(
+      const handle = await this.sandbox.files.watchDir(
         directory,
         async (event: FilesystemEvent) => {
           try {
@@ -341,7 +341,7 @@ export class FileManager {
             )
           }
         },
-        { timeout: 0 }
+        { timeoutMs: 0 }
       )
       this.fileWatchers.push(handle)
       return handle
@@ -595,7 +595,7 @@ export class FileManager {
   async closeWatchers() {
     await Promise.all(
       this.fileWatchers.map(async (handle: WatchHandle) => {
-        await handle.close()
+        await handle.stop()
       })
     )
   }
diff --git a/backend/server/src/Terminal.ts b/backend/server/src/Terminal.ts
index 482b8a4..588112d 100644
--- a/backend/server/src/Terminal.ts
+++ b/backend/server/src/Terminal.ts
@@ -1,8 +1,8 @@
-import { ProcessHandle, Sandbox } from "e2b"
+import { CommandHandle, Sandbox } from "e2b"
 
 // Terminal class to manage a pseudo-terminal (PTY) in a sandbox environment
 export class Terminal {
-  private pty: ProcessHandle | undefined // Holds the PTY process handle
+  private pty: CommandHandle | undefined // Holds the PTY process handle
   private sandbox: Sandbox // Reference to the sandbox environment
 
   // Constructor initializes the Terminal with a sandbox
@@ -24,7 +24,7 @@ export class Terminal {
     this.pty = await this.sandbox.pty.create({
       rows,
       cols,
-      timeout: 0,
+      timeoutMs: 0,
       onData: (data: Uint8Array) => {
         onData(new TextDecoder().decode(data)) // Convert received data to string and pass to handler
       },