feat(config): support ${VAR:-default} in config env substitution (#155164)

Support inline environment defaults when a variable is unset or empty, using the same token grammar for substitution and authored config write-back. Preserve escapes, unsupported forms, and escaped-reference activation guards. Include regression coverage and user documentation.

This intentionally changes previously literal fallback-shaped values on upgrade. Operators preserving such an existing Gateway credential can supply its exact bytes through OPENCLAW_GATEWAY_TOKEN, remove the inline token, and retain token mode; isolated production loader/writeback/auth-boundary proof verifies that transition.

Closes #149551

Co-authored-by: Mitchell Etzel <16581152+etzelm@users.noreply.github.com>
Co-authored-by: jalehman <550978+jalehman@users.noreply.github.com>

docs/gateway/config-secrets-env.md

@@ -52,6 +52,30 @@ Reference env vars in any config string with `${VAR_NAME}`:
 - Escape with `$${VAR}` to produce a literal `${VAR}` value.
 - Works with `$include`.
 
+#### Default values
+
+Add a fallback with `${VAR_NAME:-fallback}`. It is used when the variable is unset or empty:
+
+```json5
+{
+  mcp: {
+    servers: {
+      nautobot: {
+        env: { NAUTOBOT_TIMEOUT: "${NAUTOBOT_TIMEOUT:-60}" },
+      },
+    },
+  },
+}
+```
+
+- A reference with a fallback always resolves, so it never emits a missing-var warning.
+- An empty fallback is allowed: `${VAR:-}` resolves to an empty string.
+- The fallback is literal text. It must not contain `$` or `{`, so a nested reference such as `${A:-${B}}` is not a fallback expression; it stays literal and only the inner `${B}` substitutes.
+- Only `:-` is supported. Other shell operators (`:=`, `:?`, `:+`, `-`, `#`, `%`, `/`, `^`) are left untouched as literal text. Bash's `-` is omitted deliberately: OpenClaw treats unset and empty as the same state, so it could not differ from `:-`.
+- Escaping still wins: `$${VAR:-x}` produces the literal `${VAR:-x}` and reads nothing from the environment.
+- Authored fallbacks survive config write-back; OpenClaw restores `${VAR:-fallback}` rather than inlining the value it resolved to.
+- A fallback is config text, not a secret store. Put credentials in `env.vars` or a [SecretRef](#secretref) and reference them bare.
+
 ---
 
 ## Secrets

src/config/config.env-vars.test.ts

@@ -168,6 +168,29 @@ describe("config env vars", () => {
     });
   });
 
+  it("skips env.vars values holding an unresolved reference, bare or with a default", async () => {
+    await withEnvAsync(
+      { BARE_REF: undefined, DEFAULT_REF: undefined, PLAIN_VALUE: undefined },
+      async () => {
+        applyConfigEnvVars({
+          env: {
+            vars: {
+              BARE_REF: "${SOME_VAR}",
+              DEFAULT_REF: "${SOME_VAR:-fallback}",
+              PLAIN_VALUE: "literal",
+            },
+          },
+        } as OpenClawConfig);
+
+        // applyConfigEnvVars runs before env substitution, so a reference that is still
+        // a template would otherwise be exported into process.env as literal "${...}" text.
+        expect(process.env.BARE_REF).toBeUndefined();
+        expect(process.env.DEFAULT_REF).toBeUndefined();
+        expect(process.env.PLAIN_VALUE).toBe("literal");
+      },
+    );
+  });
+
   it("can build a merged runtime env without mutating process.env", async () => {
     await withEnvAsync({ OPENROUTER_API_KEY: undefined }, async () => {
       const merged = createConfigRuntimeEnv({

src/config/env-preserve-authored.ts

@@ -1,33 +1,21 @@
 import { isDeepStrictEqual } from "node:util";
 import { isPlainObject } from "../infra/plain-object.js";
-import { containsEnvVarReference } from "./env-substitution.js";
-
-const ENV_VAR_NAME_PATTERN = /^[A-Z_][A-Z0-9_]*$/;
+import { containsEnvVarReference, scanEnvTemplateTokens } from "./env-substitution.js";
 
+/**
+ * Keyed by bare variable name, deliberately: `${VAR}` and `${VAR:-x}` are one identity
+ * here. These counts feed fail-closed guards against a write turning an authored
+ * `$${VAR}` literal into an active reference. Keying on the authored text instead would
+ * let `$${VAR}` to `${VAR:-x}` slip past the guard that already rejects `$${VAR}` to
+ * `${VAR}`.
+ */
 type AuthoredEnvRef = { kind: "escaped" | "unescaped"; name: string };
 
 function collectAuthoredEnvRefs(value: string): AuthoredEnvRef[] {
-  const refs: AuthoredEnvRef[] = [];
-  for (let index = 0; index < value.length; index += 1) {
-    if (value[index] !== "$") {
-      continue;
-    }
-    const isEscaped = value[index + 1] === "$" && value[index + 2] === "{";
-    const nameStart = index + (isEscaped ? 3 : 2);
-    if (!isEscaped && value[index + 1] !== "{") {
-      continue;
-    }
-    const nameEnd = value.indexOf("}", nameStart);
-    if (nameEnd === -1 || !ENV_VAR_NAME_PATTERN.test(value.slice(nameStart, nameEnd))) {
-      continue;
-    }
-    refs.push({
-      kind: isEscaped ? "escaped" : "unescaped",
-      name: value.slice(nameStart, nameEnd),
-    });
-    index = nameEnd;
-  }
-  return refs;
+  return scanEnvTemplateTokens(value).map((token) => ({
+    kind: token.kind === "escaped" ? ("escaped" as const) : ("unescaped" as const),
+    name: token.name,
+  }));
 }
 
 function hasEscapedEnvVarRef(value: string): boolean {

src/config/env-preserve.test.ts

@@ -118,6 +118,50 @@ describe("restoreEnvVarRefs", () => {
     expect(result).toEqual({ value: "${API_TOKEN}:${OPTIONAL_SUFFIX}" });
   });
 
+  it("restores a ${VAR:-default} template that resolved from its fallback", () => {
+    // Without this, an authored fallback is inlined into openclaw.json on the next write
+    // and the operator's template is lost: the value resolves to "60", the writer sees a
+    // plain string, and nothing links it back to what was authored.
+    const incoming = { env: { NAUTOBOT_TIMEOUT: "60" } };
+    const parsed = { env: { NAUTOBOT_TIMEOUT: "${NAUTOBOT_TIMEOUT:-60}" } };
+
+    const result = restoreEnvVarRefs(incoming, parsed, {});
+
+    expect(result).toEqual({ env: { NAUTOBOT_TIMEOUT: "${NAUTOBOT_TIMEOUT:-60}" } });
+  });
+
+  it("restores a ${VAR:-default} template that resolved from the environment", () => {
+    const incoming = { timeout: "90" };
+    const parsed = { timeout: "${NAUTOBOT_TIMEOUT:-60}" };
+
+    const result = restoreEnvVarRefs(incoming, parsed, { NAUTOBOT_TIMEOUT: "90" });
+
+    expect(result).toEqual({ timeout: "${NAUTOBOT_TIMEOUT:-60}" });
+  });
+
+  it("keeps a deliberate edit over a ${VAR:-default} template", () => {
+    const incoming = { timeout: "120" };
+    const parsed = { timeout: "${NAUTOBOT_TIMEOUT:-60}" };
+
+    const result = restoreEnvVarRefs(incoming, parsed, {});
+
+    expect(result).toEqual({ timeout: "120" });
+  });
+
+  it("restores composite and escaped ${VAR:-default} templates", () => {
+    expect(
+      restoreEnvVarRefs(
+        { url: "https://api.example.com/v1" },
+        { url: "https://${API_HOST:-api.example.com}/v1" },
+        {},
+      ),
+    ).toEqual({ url: "https://${API_HOST:-api.example.com}/v1" });
+
+    expect(restoreEnvVarRefs({ literal: "${VAR:-x}" }, { literal: "$${VAR:-x}" }, {})).toEqual({
+      literal: "$${VAR:-x}",
+    });
+  });
+
   it("rejects structural changes to arrays containing environment references", () => {
     const duplicateEnv = {
       PLUGIN_A: "same-plugin",
@@ -129,6 +173,25 @@ describe("restoreEnvVarRefs", () => {
     ).toThrow("Config write would reorder or modify an array containing environment references");
   });
 
+  it("rejects activating an escaped literal as a ${VAR:-default} reference", () => {
+    // Rewriting an entry the operator deliberately escaped into a live env read must fail
+    // closed. Write-back accounting keys refs by bare variable name so ${VAR:-x} is caught
+    // here; keying on the authored text would let this through.
+    expectEnvRefArrayMutationError(() =>
+      restoreEnvVarRefs([{ v: "${VAR:-x}" }, { v: "other" }], [{ v: "$${VAR}" }, { v: "other" }], {
+        VAR: "from-env",
+      }),
+    );
+
+    // The unchanged round trip is not an activation: the incoming value is exactly what the
+    // escape resolves to, so the authored escape is restored rather than rejected.
+    expect(
+      restoreEnvVarRefs([{ v: "${VAR}" }, { v: "other" }], [{ v: "$${VAR}" }, { v: "other" }], {
+        VAR: "from-env",
+      }),
+    ).toEqual([{ v: "$${VAR}" }, { v: "other" }]);
+  });
+
   it("allows array edits when placeholders are escaped literals", () => {
     const result = restoreEnvVarRefs(["${ESCAPED}", "changed"], ["$${ESCAPED}", "literal"], {});
 

src/config/env-preserve.ts

@@ -8,7 +8,7 @@ import {
   containsUnaccountedActiveEscapedEnvRef,
   preservesAuthoredEscapedEnvRefs,
 } from "./env-preserve-authored.js";
-import { resolveConfigEnvVars } from "./env-substitution.js";
+import { resolveConfigEnvVars, scanEnvTemplateTokens } from "./env-substitution.js";
 
 /**
  * Preserves `${VAR}` environment variable references during config write-back.
@@ -26,8 +26,6 @@ import { resolveConfigEnvVars } from "./env-substitution.js";
  * resolves to), the new value is kept as-is.
  */
 
-const ENV_VAR_PATTERN = /\$\{[A-Z_][A-Z0-9_]*\}/;
-
 class EnvRefArrayMutationError extends Error {
   constructor() {
     super("Config write would reorder or modify an array containing environment references.");
@@ -36,10 +34,13 @@ class EnvRefArrayMutationError extends Error {
 }
 
 /**
- * Check if a string contains any `${VAR}` env var references.
+ * Check if a string contains any `${VAR}` env var references, escaped or not.
+ *
+ * Escaped `$${VAR}` counts: it still changes under substitution, so the authored text
+ * must be restored on write-back the same way an active reference is.
  */
 function hasEnvVarRef(value: string): boolean {
-  return ENV_VAR_PATTERN.test(value);
+  return scanEnvTemplateTokens(value).length > 0;
 }
 
 type ArrayIdentityPath = string[];

src/config/env-substitution.test.ts

@@ -556,4 +556,218 @@ describe("resolveConfigEnvVars", () => {
       expectResolvedScenarios(scenarios);
     });
   });
+
+  describe("default value syntax", () => {
+    it("resolves ${VAR:-default} from the fallback, the env value, or an empty fallback", () => {
+      const scenarios: SubstitutionScenario[] = [
+        {
+          name: "filed case: unset var falls back to the default",
+          config: { env: { NAUTOBOT_TIMEOUT: "${NAUTOBOT_TIMEOUT:-60}" } },
+          env: {},
+          expected: { env: { NAUTOBOT_TIMEOUT: "60" } },
+        },
+        {
+          name: "set var wins over the default",
+          config: { env: { NAUTOBOT_TIMEOUT: "${NAUTOBOT_TIMEOUT:-60}" } },
+          env: { NAUTOBOT_TIMEOUT: "90" },
+          expected: { env: { NAUTOBOT_TIMEOUT: "90" } },
+        },
+        {
+          name: "empty var takes the default, matching existing missing-var semantics",
+          config: { env: { NAUTOBOT_TIMEOUT: "${NAUTOBOT_TIMEOUT:-60}" } },
+          env: { NAUTOBOT_TIMEOUT: "" },
+          expected: { env: { NAUTOBOT_TIMEOUT: "60" } },
+        },
+        {
+          name: "empty fallback resolves to an empty string",
+          config: { key: "${OPTIONAL_SUFFIX:-}" },
+          env: {},
+          expected: { key: "" },
+        },
+        {
+          name: "fallback is used inline",
+          config: { key: "https://${API_HOST:-api.example.com}/v1" },
+          env: {},
+          expected: { key: "https://api.example.com/v1" },
+        },
+        {
+          name: "multiple references in one string mix resolved and fallback",
+          config: { key: "${API_HOST:-localhost}:${API_PORT:-8080}" },
+          env: { API_HOST: "example.com" },
+          expected: { key: "example.com:8080" },
+        },
+        {
+          name: "fallback text is preserved verbatim",
+          config: { key: "${VAR:-a b  c}" },
+          env: {},
+          expected: { key: "a b  c" },
+        },
+        {
+          name: "fallback may itself contain the operator",
+          config: { key: "${VAR:-:-}" },
+          env: {},
+          expected: { key: ":-" },
+        },
+        {
+          name: "fallback may start with a dash",
+          config: { key: "${VAR:--5}" },
+          env: {},
+          expected: { key: "-5" },
+        },
+      ];
+
+      expectResolvedScenarios(scenarios);
+    });
+
+    it("treats a fallback as a resolution, so no warning is collected", () => {
+      const warnings: EnvSubstitutionWarning[] = [];
+      const resolved = resolveConfigEnvVars(
+        {
+          mcp: { servers: { nautobot: { env: { NAUTOBOT_TIMEOUT: "${NAUTOBOT_TIMEOUT:-60}" } } } },
+        },
+        {},
+        { onMissing: (warning) => warnings.push(warning) },
+      );
+
+      expect(resolved).toEqual({
+        mcp: { servers: { nautobot: { env: { NAUTOBOT_TIMEOUT: "60" } } } },
+      });
+      expect(warnings).toEqual([]);
+    });
+
+    it("does not throw MissingEnvVarError when a fallback is authored", () => {
+      expect(resolveConfigEnvVars({ key: "${ABSENT_VAR:-fallback}" }, {})).toEqual({
+        key: "fallback",
+      });
+      // A bare reference with no fallback keeps throwing.
+      expect(() => resolveConfigEnvVars({ key: "${ABSENT_VAR}" }, {})).toThrow(MissingEnvVarError);
+    });
+
+    it("keeps the escape winning over the fallback form", () => {
+      const scenarios: SubstitutionScenario[] = [
+        {
+          name: "escaped fallback form stays a literal even when the var is set",
+          config: { key: "$${VAR:-x}" },
+          env: { VAR: "from-env" },
+          expected: { key: "${VAR:-x}" },
+        },
+        {
+          name: "escaped fallback form stays a literal when the var is unset",
+          config: { key: "$${VAR:-x}" },
+          env: {},
+          expected: { key: "${VAR:-x}" },
+        },
+      ];
+
+      expectResolvedScenarios(scenarios);
+    });
+
+    it("leaves every operator other than :- untouched", () => {
+      const scenarios: SubstitutionScenario[] = [
+        { name: "assign", config: { key: "${VAR:=d}" }, env: {}, expected: { key: "${VAR:=d}" } },
+        { name: "error", config: { key: "${VAR:?m}" }, env: {}, expected: { key: "${VAR:?m}" } },
+        { name: "alt", config: { key: "${VAR:+a}" }, env: {}, expected: { key: "${VAR:+a}" } },
+        {
+          name: "unset-only dash is not supported; empty and unset are one state here",
+          config: { key: "${VAR-d}" },
+          env: {},
+          expected: { key: "${VAR-d}" },
+        },
+        { name: "prefix", config: { key: "${VAR#p}" }, env: {}, expected: { key: "${VAR#p}" } },
+        { name: "suffix", config: { key: "${VAR%s}" }, env: {}, expected: { key: "${VAR%s}" } },
+        {
+          name: "replace",
+          config: { key: "${VAR/a/b}" },
+          env: {},
+          expected: { key: "${VAR/a/b}" },
+        },
+        {
+          name: "json modifier proposed by PR #95603 does not collide with :-",
+          config: { key: "${VAR:json}" },
+          env: {},
+          expected: { key: "${VAR:json}" },
+        },
+      ];
+
+      expectResolvedScenarios(scenarios);
+    });
+
+    it("requires a valid uppercase name to the left of the operator", () => {
+      const scenarios: SubstitutionScenario[] = [
+        {
+          name: "lowercase name",
+          config: { key: "${lowercase:-d}" },
+          env: { lowercase: "value" },
+          expected: { key: "${lowercase:-d}" },
+        },
+        {
+          name: "mixed-case name",
+          config: { key: "${MixedCase:-d}" },
+          env: {},
+          expected: { key: "${MixedCase:-d}" },
+        },
+        {
+          name: "numeric prefix",
+          config: { key: "${123INVALID:-d}" },
+          env: {},
+          expected: { key: "${123INVALID:-d}" },
+        },
+        { name: "empty name", config: { key: "${:-d}" }, env: {}, expected: { key: "${:-d}" } },
+        {
+          name: "other template dialects stay untouched",
+          config: { key: "${my-service} ${count+1} ${a=b}" },
+          env: {},
+          expected: { key: "${my-service} ${count+1} ${a=b}" },
+        },
+      ];
+
+      expectResolvedScenarios(scenarios);
+    });
+
+    it("does not change how a fallback containing $ or { is handled", () => {
+      // The fallback grammar deliberately excludes "$" and "{" so the scan for the closing
+      // brace stays a plain indexOf("}"). These inputs therefore resolve exactly as they do
+      // without default-value support: the outer expression stays literal and only a valid
+      // inner reference substitutes.
+      const scenarios: SubstitutionScenario[] = [
+        {
+          name: "nested reference: outer literal, inner substitutes",
+          config: { key: "${A:-${B}}" },
+          env: { A: "a-value", B: "b-value" },
+          expected: { key: "${A:-b-value}" },
+        },
+        {
+          name: "nested reference with both unset",
+          config: { key: "${A:-${B:-c}}" },
+          env: {},
+          expected: { key: "${A:-c}" },
+        },
+        {
+          name: "fallback containing a brace",
+          config: { key: '${A:-{"n":1}}' },
+          env: {},
+          expected: { key: '${A:-{"n":1}}' },
+        },
+        {
+          name: "fallback containing a bare dollar",
+          config: { key: "${PRICE:-$5}" },
+          env: {},
+          expected: { key: "${PRICE:-$5}" },
+        },
+      ];
+
+      expectResolvedScenarios(scenarios);
+    });
+
+    it("counts a fallback reference as an env var reference", () => {
+      expect(containsEnvVarReference("${VAR:-x}")).toBe(true);
+      expect(containsEnvVarReference("prefix-${VAR:-x}")).toBe(true);
+      expect(containsEnvVarReference("${VAR:-}")).toBe(true);
+      // Escaped and unsupported forms are still not references.
+      expect(containsEnvVarReference("$${VAR:-x}")).toBe(false);
+      expect(containsEnvVarReference("${VAR:=x}")).toBe(false);
+      expect(containsEnvVarReference("${VAR-x}")).toBe(false);
+      expect(containsEnvVarReference("${lowercase:-x}")).toBe(false);
+    });
+  });
 });

src/config/env-substitution.ts

@@ -3,8 +3,9 @@
  *
  * Supports `${VAR_NAME}` syntax in string values, substituted at config load time.
  * - Only uppercase env vars are matched: `[A-Z_][A-Z0-9_]*`
+ * - `${VAR_NAME:-fallback}` uses `fallback` when the var is unset or empty
  * - Escape with `$${}` to output literal `${}`
- * - Missing env vars throw `MissingEnvVarError` with context
+ * - Missing env vars without a fallback throw `MissingEnvVarError` with context
  *
  * @example
  * ```json5
@@ -28,6 +29,17 @@ import { parseEnvTemplateSecretRef } from "./types.secrets.js";
 
 const ENV_VAR_NAME_PATTERN = /^[A-Z_][A-Z0-9_]*$/;
 
+/**
+ * Bash-style default-value operator: `${VAR:-fallback}`.
+ *
+ * Only `:-` is recognized, the form the reported issue names. Bash also has `-`, which
+ * substitutes when the var is unset but not when it is set to `""`. That is implementable
+ * here as a local branch on the missing test below, so it is left out by choice, not by
+ * constraint: `${VAR}` already treats `""` as missing, and putting `${VAR-x}` beside
+ * `${VAR:-x}` would place two different notions of "set" in one config file.
+ */
+const DEFAULT_VALUE_OPERATOR = ":-";
+
 /** Error thrown when a config value references a missing or empty environment variable. */
 export class MissingEnvVarError extends Error {
   constructor(
@@ -39,9 +51,52 @@ export class MissingEnvVarError extends Error {
   }
 }
 
-type EnvToken =
-  | { kind: "escaped"; name: string; end: number }
-  | { kind: "substitution"; name: string; end: number };
+/** One recognized `${VAR}` / `${VAR:-fallback}` placeholder, without its position. */
+export type EnvTemplateToken = {
+  kind: "escaped" | "substitution";
+  name: string;
+  /** Authored fallback text, or `undefined` for a bare reference. `""` is a real empty fallback. */
+  defaultValue?: string;
+};
+
+type EnvToken = EnvTemplateToken & { end: number };
+
+/**
+ * Parses the text between `${` and the first following `}`.
+ *
+ * A fallback is recognized only when it carries no `$` and no `{`. That keeps the scan
+ * for the closing brace a plain `indexOf("}")`, so no input that is left literal today
+ * starts parsing differently: `${A:-${B}}` still falls through to the literal path and
+ * its inner `${B}` is still the only thing that substitutes, exactly as before.
+ */
+function parseEnvTokenBody(body: string): Omit<EnvTemplateToken, "kind"> | null {
+  if (ENV_VAR_NAME_PATTERN.test(body)) {
+    return { name: body };
+  }
+
+  const operatorIndex = body.indexOf(DEFAULT_VALUE_OPERATOR);
+  if (operatorIndex === -1) {
+    return null;
+  }
+
+  const name = body.slice(0, operatorIndex);
+  if (!ENV_VAR_NAME_PATTERN.test(name)) {
+    return null;
+  }
+
+  const defaultValue = body.slice(operatorIndex + DEFAULT_VALUE_OPERATOR.length);
+  if (defaultValue.includes("$") || defaultValue.includes("{")) {
+    return null;
+  }
+  return { name, defaultValue };
+}
+
+/** Rebuilds the authored placeholder text for a parsed token. */
+function renderEnvTemplateToken(token: EnvTemplateToken): string {
+  return token.defaultValue === undefined
+    ? `\${${token.name}}`
+    : `\${${token.name}${DEFAULT_VALUE_OPERATOR}${token.defaultValue}}`;
+}
 
 function parseEnvTokenAt(value: string, index: number): EnvToken | null {
   if (value[index] !== "$") {
@@ -57,9 +112,9 @@ function parseEnvTokenAt(value: string, index: number): EnvToken | null {
     const start = index + 3;
     const end = value.indexOf("}", start);
     if (end !== -1) {
-      const name = value.slice(start, end);
-      if (ENV_VAR_NAME_PATTERN.test(name)) {
-        return { kind: "escaped", name, end };
+      const body = parseEnvTokenBody(value.slice(start, end));
+      if (body) {
+        return { kind: "escaped", ...body, end };
       }
     }
   }
@@ -69,9 +124,9 @@ function parseEnvTokenAt(value: string, index: number): EnvToken | null {
     const start = index + 2;
     const end = value.indexOf("}", start);
     if (end !== -1) {
-      const name = value.slice(start, end);
-      if (ENV_VAR_NAME_PATTERN.test(name)) {
-        return { kind: "substitution", name, end };
+      const body = parseEnvTokenBody(value.slice(start, end));
+      if (body) {
+        return { kind: "substitution", ...body, end };
       }
     }
   }
@@ -79,6 +134,33 @@ function parseEnvTokenAt(value: string, index: number): EnvToken | null {
   return null;
 }
 
+/**
+ * Lists every recognized placeholder in authoring order.
+ *
+ * Exported so config write-back preservation shares this grammar instead of keeping its
+ * own copy; a second scanner would silently stop restoring authored templates the moment
+ * the two drifted.
+ */
+export function scanEnvTemplateTokens(value: string): EnvTemplateToken[] {
+  const tokens: EnvTemplateToken[] = [];
+  if (!value.includes("$")) {
+    return tokens;
+  }
+
+  for (let i = 0; i < value.length; i += 1) {
+    if (value[i] !== "$") {
+      continue;
+    }
+    const token = parseEnvTokenAt(value, i);
+    if (!token) {
+      continue;
+    }
+    tokens.push({ kind: token.kind, name: token.name, defaultValue: token.defaultValue });
+    i = token.end;
+  }
+  return tokens;
+}
+
 /** Missing environment variable warning emitted when substitution is configured to continue. */
 export type EnvSubstitutionWarning = {
   varName: string;
@@ -119,20 +201,27 @@ function substituteString(
 
     const token = parseEnvTokenAt(value, i);
     if (token?.kind === "escaped") {
-      chunks.push(`\${${token.name}}`);
+      chunks.push(renderEnvTemplateToken(token));
       i = token.end;
       continue;
     }
     if (token?.kind === "substitution") {
       const envValue = env[token.name];
       if (envValue === undefined || envValue === "") {
+        if (token.defaultValue !== undefined) {
+          // An authored fallback resolves the reference, so this is not a missing var:
+          // no warning, no MissingEnvVarError, and no pending-SecretRef signal.
+          chunks.push(token.defaultValue);
+          i = token.end;
+          continue;
+        }
         if (opts?.onMissing) {
           opts.onMissing({ varName: token.name, configPath });
           if (authoredRef?.id === token.name) {
             opts.onPendingEnvSecretRef?.(token.name, configPath);
           }
           // Preserve the original placeholder so the value is visibly unresolved.
-          chunks.push(`\${${token.name}}`);
+          chunks.push(renderEnvTemplateToken(token));
           i = token.end;
           continue;
         }