diff --git a/packages/shared/src/components/MainLayout.tsx b/packages/shared/src/components/MainLayout.tsx
index b9eed590b5..cc4c74e4eb 100644
--- a/packages/shared/src/components/MainLayout.tsx
+++ b/packages/shared/src/components/MainLayout.tsx
@@ -22,6 +22,7 @@ import { SharedFeedPage } from './utilities';
 import { isTesting, onboardingUrl } from '../lib/constants';
 import { isOnboardingFeedPathname } from '../lib/onboarding';
 import { useBanner } from '../hooks/useBanner';
+import { useSidebarCompact } from '../hooks/useSidebarCompact';
 import { useGrowthBookContext } from './GrowthBookProvider';
 import {
   ActiveFeedNameContextProvider,
@@ -109,9 +110,9 @@ function MainLayoutComponent({
   const { growthbook } = useGrowthBookContext();
   const { sidebarRendered } = useSidebarRendered();
   const { isAvailable: isBannerAvailable } = useBanner();
-  const { sidebarExpanded, autoDismissNotifications, loadedSettings, flags } =
+  const { sidebarExpanded, autoDismissNotifications, loadedSettings } =
     useContext(SettingsContext);
-  const isSidebarCompact = !!flags?.sidebarCompact;
+  const { value: isSidebarCompact } = useSidebarCompact();
   const v2CollapsedPadding = isSidebarCompact
     ? 'tablet:pl-16 laptop:pl-16'
     : 'tablet:pl-16 laptop:pl-20';
diff --git a/packages/shared/src/components/sidebar/SidebarDesktopV2.tsx b/packages/shared/src/components/sidebar/SidebarDesktopV2.tsx
index eaa5518046..10f01b3b0e 100644
--- a/packages/shared/src/components/sidebar/SidebarDesktopV2.tsx
+++ b/packages/shared/src/components/sidebar/SidebarDesktopV2.tsx
@@ -90,7 +90,7 @@ import {
   TerminalIcon,
   TrendingIcon,
 } from '../icons';
-import { useSettingsBooleanFlag } from '../../hooks/useSettingsBooleanFlag';
+import { useSidebarCompact } from '../../hooks/useSidebarCompact';
 import { IconSize } from '../Icon';
 import { Tooltip } from '../tooltip/Tooltip';
 import { RailHoverPanel } from './RailHoverPanel';
@@ -729,7 +729,7 @@ export const SidebarDesktopV2 = ({
   if (isExtension) {
     myFeedPath = `${webappUrl}my-feed`;
   }
-  const { value: isCompact } = useSettingsBooleanFlag('sidebarCompact');
+  const { value: isCompact } = useSidebarCompact();
   // Compact mode reverts to the original icon-only widths (pre-label rail).
   // Both width sets are known-good; MainLayout mirrors the collapsed/expanded
   // padding so the content never overlaps the rail.
@@ -2345,60 +2345,72 @@ export const SidebarDesktopV2 = ({
             suppressTransition,
           )}
         >
-          {/* pl-5 lines the panel title up with the list rows' icon glyphs
-            (icons sit ~8px into their w-9 column) and the section titles. */}
-          <div className="pl-5 pr-3 pt-6">
-            {isSettingsSelected ? (
-              <Button
-                type="button"
-                variant={ButtonVariant.Subtle}
-                size={ButtonSize.Small}
-                // Smaller glyph, flipped to point left (it's a back action).
-                icon={
-                  <MoveToIcon size={IconSize.Size16} className="-scale-x-100" />
-                }
-                onClick={onBackToApp}
-                className="-ml-1"
-              >
-                Back to app
-              </Button>
-            ) : (
-              <div className="flex h-10 items-center gap-1">
-                <Typography bold type={TypographyType.Callout}>
-                  {utilityPanelTitle}
-                </Typography>
-              </div>
+          {/* Pinned to the open width so the content does not reflow while
+            the panel animates its own width. */}
+          <div
+            className={classNames(
+              'flex min-h-0 flex-1 flex-col',
+              !isSettingsSelected && 'w-60',
             )}
-          </div>
-
-          {isLoggedIn && !isUtilityPanelSelected && additionalButtons && (
-            <div className="mt-2 flex items-center gap-1 px-3">
-              {additionalButtons}
+          >
+            {/* pl-5 lines the panel title up with the list rows' icon glyphs
+              (icons sit ~8px into their w-9 column) and the section titles. */}
+            <div className="pl-5 pr-3 pt-6">
+              {isSettingsSelected ? (
+                <Button
+                  type="button"
+                  variant={ButtonVariant.Subtle}
+                  size={ButtonSize.Small}
+                  // Smaller glyph, flipped to point left (it's a back action).
+                  icon={
+                    <MoveToIcon
+                      size={IconSize.Size16}
+                      className="-scale-x-100"
+                    />
+                  }
+                  onClick={onBackToApp}
+                  className="-ml-1"
+                >
+                  Back to app
+                </Button>
+              ) : (
+                <div className="flex h-10 items-center gap-1">
+                  <Typography bold type={TypographyType.Callout}>
+                    {utilityPanelTitle}
+                  </Typography>
+                </div>
+              )}
             </div>
-          )}
 
-          <SidebarScrollWrapper
-            className={classNames(
-              'mt-1 min-h-0 flex-1',
-              showFeedbackWidget && !isUtilityPanelSelected && 'pb-16',
+            {isLoggedIn && !isUtilityPanelSelected && additionalButtons && (
+              <div className="mt-2 flex items-center gap-1 px-3">
+                {additionalButtons}
+              </div>
             )}
-          >
-            <Nav
+
+            <SidebarScrollWrapper
               className={classNames(
-                isUtilityPanelSelected ? '!pb-2 !pt-0' : '!pt-0',
-                isStreakPanel && 'min-h-0 flex-1',
+                'mt-1 min-h-0 flex-1',
+                showFeedbackWidget && !isUtilityPanelSelected && 'pb-16',
               )}
             >
-              {renderSelectedSection()}
-            </Nav>
-          </SidebarScrollWrapper>
-
-          {!isUtilityPanelSelected && <HelpWidget sidebarExpanded />}
-          {showFeedbackWidget && !isUtilityPanelSelected && (
-            <div className="absolute inset-x-3 bottom-3">
-              <FeedbackWidget placement="sidebar" />
-            </div>
-          )}
+              <Nav
+                className={classNames(
+                  isUtilityPanelSelected ? '!pb-2 !pt-0' : '!pt-0',
+                  isStreakPanel && 'min-h-0 flex-1',
+                )}
+              >
+                {renderSelectedSection()}
+              </Nav>
+            </SidebarScrollWrapper>
+
+            {!isUtilityPanelSelected && <HelpWidget sidebarExpanded />}
+            {showFeedbackWidget && !isUtilityPanelSelected && (
+              <div className="absolute inset-x-3 bottom-3">
+                <FeedbackWidget placement="sidebar" />
+              </div>
+            )}
+          </div>
         </section>
       </SidebarAside>
     </SidebarDragStateProvider>
diff --git a/packages/shared/src/hooks/useSettingsBooleanFlag.ts b/packages/shared/src/hooks/useSettingsBooleanFlag.ts
index e3ab0b60be..547505e575 100644
--- a/packages/shared/src/hooks/useSettingsBooleanFlag.ts
+++ b/packages/shared/src/hooks/useSettingsBooleanFlag.ts
@@ -17,15 +17,18 @@ interface UseSettingsBooleanFlag {
 
 /**
  * Reads a boolean flag from `SettingsFlags` and exposes setters that persist
- * through the shared `useSettingsContext`. Coerces undefined to `false` so
- * callers can use the value directly. Only accepts keys whose value type is
+ * through the shared `useSettingsContext`. An unset flag falls back to
+ * `defaultValue`, so a flag that ships on by default stays distinguishable from
+ * one the user explicitly turned off. Only accepts keys whose value type is
  * `boolean | undefined`.
  */
 export const useSettingsBooleanFlag = <K extends BooleanFlagKey>(
   key: K,
+  defaultValue = false,
 ): UseSettingsBooleanFlag => {
   const { flags, updateFlag } = useSettingsContext();
-  const value = Boolean(flags?.[key]);
+  const stored = flags?.[key];
+  const value = stored === undefined ? defaultValue : Boolean(stored);
   return {
     value,
     set: (next) => updateFlag(key, next as SettingsFlags[K]),
diff --git a/packages/shared/src/hooks/useSidebarCompact.ts b/packages/shared/src/hooks/useSidebarCompact.ts
new file mode 100644
index 0000000000..c07795a3aa
--- /dev/null
+++ b/packages/shared/src/hooks/useSidebarCompact.ts
@@ -0,0 +1,12 @@
+import { useSettingsBooleanFlag } from './useSettingsBooleanFlag';
+
+// The v2 rail ships without the labels under its icons, so an account that
+// never touched the density setting gets compact. Only an explicit `false`
+// (the user picking Comfortable) brings the labels back.
+//
+// Read it through here rather than the raw flag: the rail sets its own width
+// from this and MainLayout pads the content to match, so the two disagreeing
+// would leave the content overlapping the rail or short of it.
+export const useSidebarCompact = (): ReturnType<
+  typeof useSettingsBooleanFlag
+> => useSettingsBooleanFlag('sidebarCompact', true);
diff --git a/packages/webapp/pages/settings/appearance.tsx b/packages/webapp/pages/settings/appearance.tsx
index c2a37e05ac..9e3ab546ac 100644
--- a/packages/webapp/pages/settings/appearance.tsx
+++ b/packages/webapp/pages/settings/appearance.tsx
@@ -7,6 +7,7 @@ import { ThemeSection } from '@dailydotdev/shared/src/components/ProfileMenu/sec
 import { useSettingsContext } from '@dailydotdev/shared/src/contexts/SettingsContext';
 import { useViewSize, ViewSize } from '@dailydotdev/shared/src/hooks';
 import { useSettingsBooleanFlag } from '@dailydotdev/shared/src/hooks/useSettingsBooleanFlag';
+import { useSidebarCompact } from '@dailydotdev/shared/src/hooks/useSidebarCompact';
 import { useLayoutVariant } from '@dailydotdev/shared/src/hooks/layout/useLayoutVariant';
 import { useReaderModalEligibility } from '@dailydotdev/shared/src/components/post/reader/hooks/useReaderModalEligibility';
 import { useLegacyPostLayoutOptOut } from '@dailydotdev/shared/src/components/post/reader/hooks/useLegacyPostLayoutOptOut';
@@ -71,7 +72,7 @@ const AccountManageSubscriptionPage = (): ReactElement => {
     flags?.readerInstallPromptAcknowledged ?? false;
   const { isV2: isLayoutV2 } = useLayoutVariant();
   const { value: isSidebarCompact, toggle: toggleSidebarCompact } =
-    useSettingsBooleanFlag('sidebarCompact');
+    useSidebarCompact();
   const onToggleReadInside = () => {
     if (isReadInsideEnabled) {
       optOut();