diff --git a/Dockerfile b/Dockerfile
index 4ecb896b..253eb2d5 100644
--- a/Dockerfile
+++ b/Dockerfile
@@ -3,30 +3,6 @@ FROM node:20 as build
 
 WORKDIR /app
 
-# Default arguments for environment variables
-ARG DATABASE_TYPE=postgres
-ARG DATABASE_USERNAME=postgres
-ARG DATABASE_PASSWORD=postgres
-ARG DATABASE_NAME=vckit
-ARG DATABASE_HOST=localhost
-ARG DATABASE_PORT=5432
-ARG DATABASE_ENCRYPTION_KEY=29739248cad1bd1a0fc4d9b75cd4d2990de535baf5caadfdf8d8f86664aa830c
-ARG PORT=3332
-ARG PROTOCOL=http
-ARG API_DOMAIN=localhost:3332
-
-# Set environment variables
-ENV DATABASE_TYPE=${DATABASE_TYPE}
-ENV DATABASE_USERNAME=${DATABASE_USERNAME}
-ENV DATABASE_PASSWORD=${DATABASE_PASSWORD}
-ENV DATABASE_NAME=${DATABASE_NAME}
-ENV DATABASE_HOST=${DATABASE_HOST}
-ENV DATABASE_PORT=${DATABASE_PORT}
-ENV DATABASE_ENCRYPTION_KEY=${DATABASE_ENCRYPTION_KEY}
-ENV PORT=${PORT}
-ENV PROTOCOL=${PROTOCOL}
-ENV API_DOMAIN=${API_DOMAIN}
-
 # Copy necessary files
 COPY package.json .
 COPY pnpm-lock.yaml .
@@ -144,11 +120,11 @@ COPY --from=build /app/packages/vc-api/package.json packages/vc-api/package.json
 COPY --from=build /app/packages/vc-api/src/vc-api-schemas/vc-api.yaml packages/vc-api/src/vc-api-schemas/vc-api.yaml
 
 # Add an entrypoint script to the image
-COPY entrypoint.sh /entrypoint.sh
-RUN chmod +x /entrypoint.sh
+COPY entrypoint.sh .
+RUN chmod +x entrypoint.sh
 
 # Specify the script to run on container start
-ENTRYPOINT ["/entrypoint.sh"]
+ENTRYPOINT ["./entrypoint.sh"]
 
 # Expose the port
 EXPOSE ${PORT}
diff --git a/docker-compose.yaml b/docker-compose.yaml
index e7a9cbac..8598bbfd 100644
--- a/docker-compose.yaml
+++ b/docker-compose.yaml
@@ -13,8 +13,8 @@ services:
   vckit-api:
     build:
       context: .
-      args:
-        DATABASE_HOST: db
+    env_file:
+      - local.env
     ports:
       - 3332:3332
     depends_on:
diff --git a/local.env b/local.env
new file mode 100644
index 00000000..579060cb
--- /dev/null
+++ b/local.env
@@ -0,0 +1,10 @@
+DATABASE_HOST=db
+DATABASE_TYPE=postgres
+DATABASE_USERNAME=postgres
+DATABASE_PASSWORD=postgres
+DATABASE_NAME=vckit
+DATABASE_PORT=5432
+DATABASE_ENCRYPTION_KEY=29739248cad1bd1a0fc4d9b75cd4d2990de535baf5caadfdf8d8f86664aa830c
+PORT=3332
+PROTOCOL=http
+API_DOMAIN=localhost:3332
\ No newline at end of file