diff --git a/docker/nginx/conf.d/include/location-skylink b/docker/nginx/conf.d/include/location-skylink
index 9d362a43..c47bb2f8 100644
--- a/docker/nginx/conf.d/include/location-skylink
+++ b/docker/nginx/conf.d/include/location-skylink
@@ -1,4 +1,110 @@
 include /etc/nginx/conf.d/include/cors;
+include /etc/nginx/conf.d/include/proxy-buffer;
+include /etc/nginx/conf.d/include/proxy-cache-downloads;
+include /etc/nginx/conf.d/include/track-download;
 
+limit_conn downloads_by_ip 100; # ddos protection: max 100 downloads at a time
+
+# ensure that skylink that we pass around is base64 encoded (transform base32 encoded ones)
+# this is important because we want only one format in cache keys and logs
+set_by_lua_block $skylink { return require("skynet.skylink").parse(ngx.var.skylink) }
+
+# $skylink_v1 and $skylink_v2 variables default to the same value but in case the requested skylink was:
+# a) skylink v1 - it would not matter, no additional logic is executed
+# b) skylink v2 - in a lua block below we will resolve the skylink v2 into skylink v1 and update
+#      $skylink_v1 variable so then the proxy request to skyd can be cached in nginx (proxy_cache_key
+#      in proxy-cache-downloads includes $skylink_v1 as a part of the cache key)
+set $skylink_v1 $skylink;
+set $skylink_v2 $skylink;
+
+# variable for Skynet-Proof header that we need to inject
+# into a response if the request was for skylink v2
+set $skynet_proof '';
+
+access_by_lua_block {
+    -- the block below only makes sense if we are using nginx cache
+    if not ngx.var.skyd_disk_cache_enabled then
+        local httpc = require("resty.http").new()
+
+        -- detect whether requested skylink is v2
+        local isBase32v2 = string.len(ngx.var.skylink) == 55 and string.sub(ngx.var.skylink, 0, 2) == "04"
+        local isBase64v2 = string.len(ngx.var.skylink) == 46 and string.sub(ngx.var.skylink, 0, 2) == "AQ"
+
+        if isBase32v2 or isBase64v2 then
+            -- 10.10.10.10 points to sia service (alias not available when using resty-http)
+            local res, err = httpc:request_uri("http://10.10.10.10:9980/skynet/resolve/" .. ngx.var.skylink_v2, {
+                headers = { ["User-Agent"] = "Sia-Agent" }
+            })
+
+            -- print error and exit with 500 or exit with response if status is not 200
+            if err or (res and res.status ~= ngx.HTTP_OK) then
+                ngx.status = (err and ngx.HTTP_INTERNAL_SERVER_ERROR) or res.status
+                ngx.header["content-type"] = "text/plain"
+                ngx.say(err or res.body)
+                return ngx.exit(ngx.status)
+            end
+
+            local json = require('cjson')
+            local resolve = json.decode(res.body)
+            ngx.var.skylink_v1 = resolve.skylink
+            ngx.var.skynet_proof = res.headers["Skynet-Proof"]
+        end
+
+        -- check if skylink v1 is present on blocklist (compare hashes)
+        if require("skynet.blocklist").is_blocked(ngx.var.skylink_v1) then
+            return require("skynet.blocklist").exit_illegal()
+        end
+
+        -- if skylink is found on nocache list then set internal nocache variable
+        -- to tell nginx that it should not try and cache this file (too large)
+        if ngx.shared.nocache:get(ngx.var.skylink_v1) then
+            ngx.var.nocache = "1"
+        end
+    end
+
+    if require("skynet.account").accounts_enabled() then
+        -- check if portal is in authenticated only mode
+        if require("skynet.account").is_access_unauthorized() then
+            return require("skynet.account").exit_access_unauthorized()
+        end
+
+        -- check if portal is in subscription only mode
+        if require("skynet.account").is_access_forbidden() then
+            return require("skynet.account").exit_access_forbidden()
+        end
+
+        -- get account limits of currently authenticated user
+        local limits = require("skynet.account").get_account_limits()
+    end
+}
+
+header_filter_by_lua_block {
+    ngx.header["Skynet-Portal-Api"] = ngx.var.scheme .. "://" .. ngx.var.skynet_portal_domain
+    ngx.header["Skynet-Server-Api"] = ngx.var.scheme .. "://" .. ngx.var.skynet_server_domain
+
+    -- the block below only makes sense if we are using nginx cache
+    if not ngx.var.skyd_disk_cache_enabled then
+        -- not empty skynet_proof means this is a skylink v2 request
+        -- so we should replace the Skynet-Proof header with the one
+        -- we got from /skynet/resolve/ endpoint, otherwise we would
+        -- be serving cached empty v1 skylink Skynet-Proof header
+        if ngx.var.skynet_proof and ngx.var.skynet_proof ~= "" then
+            ngx.header["Skynet-Proof"] = ngx.var.skynet_proof
+        end
+
+        -- add skylink to nocache list if it exceeds 1GB (1e+9 bytes) threshold
+        -- (content length can be nil for already cached files - we can ignore them)
+        if ngx.header["Content-Length"] and tonumber(ngx.header["Content-Length"]) > 1e+9 then
+            ngx.shared.nocache:set(ngx.var.skylink_v1, ngx.header["Content-Length"])
+        end
+    end
+}
+
+proxy_read_timeout 600;
 proxy_set_header User-Agent: Sia-Agent;
-proxy_pass http://sia:9980/skynet/skylink/$skylink$path$is_args$args;
+
+# in case the requested skylink was v2 and we already resolved it to skylink v1, we are going to pass resolved
+# skylink v1 to skyd to save that extra skylink v2 lookup in skyd but in turn, in case skyd returns a redirect
+# we need to rewrite the skylink v1 to skylink v2 in the location header with proxy_redirect
+proxy_redirect $skylink_v1 $skylink_v2;
+proxy_pass http://sia:9980/skynet/skylink/$skylink_v1$path$is_args$args;
diff --git a/docker/nginx/conf.d/include/proxy-cache-downloads b/docker/nginx/conf.d/include/proxy-cache-downloads
index 94a635e1..a91c14cc 100644
--- a/docker/nginx/conf.d/include/proxy-cache-downloads
+++ b/docker/nginx/conf.d/include/proxy-cache-downloads
@@ -1,4 +1,5 @@
 proxy_cache skynet; # cache name
+#proxy_cache_key $skylink_v1$path$arg_format$arg_attachment$arg_start$arg_end$http_range; # unique cache key
 proxy_cache_key $skylink$path$arg_format$arg_attachment$arg_start$arg_end$http_range; # unique cache key
 proxy_cache_min_uses 3; # cache after 3 uses
 proxy_cache_valid 200 206 307 308 48h; # keep 200, 206, 307 and 308 responses valid for up to 2 days