diff --git a/lib/config.js b/lib/config.js
index a4a808066..bb06a9428 100644
--- a/lib/config.js
+++ b/lib/config.js
@@ -1,17 +1,19 @@
 var fs = require('fs');
 var grunt = require('grunt');
+var merge = require('merge');
 
 // TODO: add wrapper for fs so it can also work in the browser
 // can work with both read and save
-var Config = function(env) {
-  this.env = env;
+var Config = function(options) {
+  this.env = options.env;
   this.blockchainConfig = {};
   this.contractsConfig  = {};
   this.pipelineConfig   = {};
   this.chainTracker     = {};
   this.assetFiles = {};
   this.contractsFiles = [];
-  this.configDir = 'config/';
+  this.configDir = options.configDir || 'config/';
+  this.chainsFile = options.chainsFile || './chains.json';
 };
 
 Config.prototype.loadConfigFiles = function(options) {
@@ -31,17 +33,17 @@ Config.prototype.reloadConfig = function() {
 };
 
 Config.prototype.loadBlockchainConfigFile = function() {
-  //var defaultBlockchainConfig = JSON.parse(fs.readFileSync(this.configDir + this.env + "/blockchain.json"))[this.env];
   var defaultBlockchainConfig = JSON.parse(fs.readFileSync(this.configDir + "blockchain.json"))[this.env];
   this.blockchainConfig = defaultBlockchainConfig;
 };
 
 Config.prototype.loadContractsConfigFile = function() {
-  var defaultContractsConfig = JSON.parse(fs.readFileSync(this.configDir + "contracts.json"))['default'];
-  //var envContractsConfig = JSON.parse(fs.readFileSync(this.configDir + this.env + "/contracts.json"))[this.env];
+  var contractsConfig = JSON.parse(fs.readFileSync(this.configDir + "contracts.json"));
+  var defaultContractsConfig = contractsConfig['default'];
+  var envContractsConfig = contractsConfig[this.env];
 
-  //merge.recursive(defaultContractsConfig, envContractsConfig);
-  this.contractsConfig = defaultContractsConfig;
+  var mergedConfig = merge.recursive(defaultContractsConfig, envContractsConfig);
+  this.contractsConfig = mergedConfig;
 };
 
 Config.prototype.loadPipelineConfigFile = function() {
@@ -61,12 +63,12 @@ Config.prototype.loadChainTrackerFile = function() {
   //var self = this;
   var chainTracker;
   try {
-    chainTracker = JSON.parse(fs.readFileSync("./chains.json"));
+    chainTracker = JSON.parse(fs.readFileSync(this.chainsFile));
   }
   catch(err) {
-    //self.logger.info('chains.json file not found, creating it...');
+    //self.logger.info(this.chainsFile + ' file not found, creating it...');
     chainTracker = {};
-    fs.writeFileSync('./chains.json', '{}');
+    fs.writeFileSync(this.chainsFile, '{}');
   }
   this.chainTracker = chainTracker;
 };
diff --git a/lib/index.js b/lib/index.js
index 78284bcb9..57c85e247 100644
--- a/lib/index.js
+++ b/lib/index.js
@@ -37,7 +37,7 @@ var Embark = {
   },
 
   initConfig: function(env, options) {
-    this.config = new Config(env);
+    this.config = new Config({env: env});
     this.config.loadConfigFiles(options);
     this.logger = new Logger({logLevel: 'debug'});
 
diff --git a/lib/test.js b/lib/test.js
index 3e14537ed..49396dedb 100644
--- a/lib/test.js
+++ b/lib/test.js
@@ -29,7 +29,7 @@ Test.prototype.deployAll = function(contractsConfig, cb) {
 
   async.waterfall([
       function buildContracts(callback) {
-        var config = new Config('test');
+        var config = new Config({env: 'test'});
         config.contractsFiles = config.loadFiles(["app/contracts/**"]);
         config.contractsConfig = {contracts: contractsConfig} ;
 
diff --git a/package.json b/package.json
index 53002f54f..032391a73 100644
--- a/package.json
+++ b/package.json
@@ -23,6 +23,7 @@
     "finalhandler": "^0.5.0",
     "grunt": "^0.4.5",
     "json-honey": "^0.4.1",
+    "merge": "^1.2.0",
     "meteor-build-client": "^0.1.6",
     "mkdirp": "^0.5.1",
     "read-yaml": "^1.0.0",
diff --git a/test/compiler.js b/test/compiler.js
new file mode 100644
index 000000000..631fe65d9
--- /dev/null
+++ b/test/compiler.js
@@ -0,0 +1,30 @@
+/*globals describe, it*/
+var Compiler = require('../lib/compiler.js');
+var assert = require('assert');
+var fs = require('fs');
+
+var readFile = function(file) {
+  return {filename: file, content: fs.readFileSync(file).toString()};
+};
+
+describe('embark.Compiler', function() {
+  var compiler = new Compiler();
+
+  describe('#compile_solidity', function() {
+    var compiledContracts = compiler.compile_solidity([
+      readFile('test/contracts/simple_storage.sol'),
+      readFile('test/contracts/token.sol')
+    ]);
+
+    var expectedObject = {};
+    expectedObject["SimpleStorage"] = {"code":"6060604052604051602080607d83395060806040525160008190555060568060276000396000f3606060405260e060020a60003504632a1afcd98114602e57806360fe47b11460365780636d4ce63c146040575b005b604460005481565b600435600055602c565b6000545b60408051918252519081900360200190f3","runtimeBytecode":"606060405260e060020a60003504632a1afcd98114602e57806360fe47b11460365780636d4ce63c146040575b005b604460005481565b600435600055602c565b6000545b60408051918252519081900360200190f3","gasEstimates":{"creation":[20097,17200],"external":{"get()":221,"set(uint256)":20121,"storedData()":191},"internal":{}},"functionHashes":{"get()":"6d4ce63c","set(uint256)":"60fe47b1","storedData()":"2a1afcd9"},"abiDefinition":[{"constant":true,"inputs":[],"name":"storedData","outputs":[{"name":"","type":"uint256"}],"type":"function"},{"constant":false,"inputs":[{"name":"x","type":"uint256"}],"name":"set","outputs":[],"type":"function"},{"constant":true,"inputs":[],"name":"get","outputs":[{"name":"retVal","type":"uint256"}],"type":"function"},{"inputs":[{"name":"initialValue","type":"uint256"}],"type":"constructor"}]};
+
+    expectedObject["Token"] = {"code":"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","runtimeBytecode":"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","gasEstimates":{"creation":[40348,165800],"external":{"allowance(address,address)":532,"approve(address,uint256)":22208,"balanceOf(address)":382,"totalSupply()":217,"transfer(address,uint256)":null,"transferFrom(address,address,uint256)":63256},"internal":{"safeToAdd(uint256,uint256)":52}},"functionHashes":{"allowance(address,address)":"dd62ed3e","approve(address,uint256)":"095ea7b3","balanceOf(address)":"70a08231","totalSupply()":"18160ddd","transfer(address,uint256)":"a9059cbb","transferFrom(address,address,uint256)":"23b872dd"},"abiDefinition":[{"constant":false,"inputs":[{"name":"spender","type":"address"},{"name":"value","type":"uint256"}],"name":"approve","outputs":[{"name":"ok","type":"bool"}],"type":"function"},{"constant":true,"inputs":[],"name":"totalSupply","outputs":[{"name":"supply","type":"uint256"}],"type":"function"},{"constant":false,"inputs":[{"name":"from","type":"address"},{"name":"to","type":"address"},{"name":"value","type":"uint256"}],"name":"transferFrom","outputs":[{"name":"ok","type":"bool"}],"type":"function"},{"constant":true,"inputs":[{"name":"who","type":"address"}],"name":"balanceOf","outputs":[{"name":"value","type":"uint256"}],"type":"function"},{"constant":false,"inputs":[{"name":"to","type":"address"},{"name":"value","type":"uint256"}],"name":"transfer","outputs":[{"name":"ok","type":"bool"}],"type":"function"},{"constant":true,"inputs":[{"name":"owner","type":"address"},{"name":"spender","type":"address"}],"name":"allowance","outputs":[{"name":"_allowance","type":"uint256"}],"type":"function"},{"inputs":[{"name":"initial_balance","type":"uint256"}],"type":"constructor"},{"anonymous":false,"inputs":[{"indexed":true,"name":"from","type":"address"},{"indexed":true,"name":"to","type":"address"},{"indexed":false,"name":"value","type":"uint256"}],"name":"Transfer","type":"event"},{"anonymous":false,"inputs":[{"indexed":true,"name":"owner","type":"address"},{"indexed":true,"name":"spender","type":"address"},{"indexed":false,"name":"value","type":"uint256"}],"name":"Approval","type":"event"}]};
+
+    it('should generate compiled code and abi', function() {
+      assert.deepEqual(compiledContracts, expectedObject);
+    });
+
+  });
+
+});
diff --git a/test/config.js b/test/config.js
new file mode 100644
index 000000000..3f3ef9207
--- /dev/null
+++ b/test/config.js
@@ -0,0 +1,57 @@
+/*globals describe, it*/
+var Config = require('../lib/config.js');
+var assert = require('assert');
+var fs = require('fs');
+
+describe('embark.Config', function() {
+  var config = new Config({
+    env: 'myenv',
+    configDir: './test/test1/config/'
+  });
+
+  describe('#loadBlockchainConfigFile', function() {
+    it('should load blockchain config correctly', function() {
+      config.loadBlockchainConfigFile();
+      var expectedConfig = {
+        "networkType": "custom",
+        "genesisBlock": "config/development/genesis.json",
+        "datadir": ".embark/development/datadir",
+        "mineWhenNeeded": true,
+        "nodiscover": true,
+        "rpcHost": "localhost",
+        "rpcPort": 8545,
+        "rpcCorsDomain": "http://localhost:8000",
+        "account": {
+          "password": "config/development/password"
+        }
+      };
+
+      assert.deepEqual(config.blockchainConfig, expectedConfig);
+    });
+  });
+
+  describe('#loadContractsConfigFile', function() {
+    it('should load contract config correctly', function() {
+        config.loadContractsConfigFile();
+        var expectedConfig = {
+          "gas": "auto",
+          "contracts": {
+            "SimpleStorage": {
+              "args": [
+                100
+              ],
+              "gas": 123456
+            },
+            "Token": {
+              "args": [
+                200
+              ]
+            }
+          }
+        };
+
+        assert.deepEqual(config.contractsConfig, expectedConfig);
+    });
+  });
+
+});
diff --git a/test/contracts/simple_storage.sol b/test/contracts/simple_storage.sol
new file mode 100644
index 000000000..1137a7997
--- /dev/null
+++ b/test/contracts/simple_storage.sol
@@ -0,0 +1,17 @@
+contract SimpleStorage {
+  uint public storedData;
+
+  function SimpleStorage(uint initialValue) {
+    storedData = initialValue;
+  }
+
+  function set(uint x) {
+    storedData = x;
+  }
+
+  function get() constant returns (uint retVal) {
+    return storedData;
+  }
+
+}
+
diff --git a/test/contracts/token.sol b/test/contracts/token.sol
new file mode 100644
index 000000000..db836a662
--- /dev/null
+++ b/test/contracts/token.sol
@@ -0,0 +1,64 @@
+// https://github.com/nexusdev/erc20/blob/master/contracts/base.sol
+
+contract Token {
+
+  event Transfer(address indexed from, address indexed to, uint value);
+  event Approval( address indexed owner, address indexed spender, uint value);
+
+  mapping( address => uint ) _balances;
+  mapping( address => mapping( address => uint ) ) _approvals;
+  uint _supply;
+  function Token( uint initial_balance ) {
+    _balances[msg.sender] = initial_balance;
+    _supply = initial_balance;
+  }
+  function totalSupply() constant returns (uint supply) {
+    return _supply;
+  }
+  function balanceOf( address who ) constant returns (uint value) {
+    return _balances[who];
+  }
+  function transfer( address to, uint value) returns (bool ok) {
+    if( _balances[msg.sender] < value ) {
+      throw;
+    }
+    if( !safeToAdd(_balances[to], value) ) {
+      throw;
+    }
+    _balances[msg.sender] -= value;
+    _balances[to] += value;
+    Transfer( msg.sender, to, value );
+    return true;
+  }
+  function transferFrom( address from, address to, uint value) returns (bool ok) {
+    // if you don't have enough balance, throw
+    if( _balances[from] < value ) {
+      throw;
+    }
+    // if you don't have approval, throw
+    if( _approvals[from][msg.sender] < value ) {
+      throw;
+    }
+    if( !safeToAdd(_balances[to], value) ) {
+      throw;
+    }
+    // transfer and return true
+    _approvals[from][msg.sender] -= value;
+    _balances[from] -= value;
+    _balances[to] += value;
+    Transfer( from, to, value );
+    return true;
+  }
+  function approve(address spender, uint value) returns (bool ok) {
+    // TODO: should increase instead
+    _approvals[msg.sender][spender] = value;
+    Approval( msg.sender, spender, value );
+    return true;
+  }
+  function allowance(address owner, address spender) constant returns (uint _allowance) {
+    return _approvals[owner][spender];
+  }
+  function safeToAdd(uint a, uint b) internal returns (bool) {
+    return (a + b >= a);
+  }
+}
diff --git a/test/test1/config/blockchain.json b/test/test1/config/blockchain.json
new file mode 100644
index 000000000..090f40788
--- /dev/null
+++ b/test/test1/config/blockchain.json
@@ -0,0 +1,37 @@
+{
+  "myenv": {
+    "networkType": "custom",
+    "genesisBlock": "config/development/genesis.json",
+    "datadir": ".embark/development/datadir",
+    "mineWhenNeeded": true,
+    "nodiscover": true,
+    "rpcHost": "localhost",
+    "rpcPort": 8545,
+    "rpcCorsDomain": "http://localhost:8000",
+    "account": {
+      "password": "config/development/password"
+    }
+  },
+  "testnet": {
+    "networkType": "testnet",
+    "rpcHost": "localhost",
+    "rpcPort": 8545
+  },
+  "livenet": {
+    "networkType": "livenet",
+    "rpcHost": "localhost",
+    "rpcPort": 8545,
+    "rpcCorsDomain": "http://localhost:8000",
+    "account": {
+      "password": "config/production/password"
+    }
+  },
+  "privatenet": {
+    "networkType": "custom",
+    "rpcHost": "localhost",
+    "rpcPort": 8545,
+    "datadir": "yourdatadir",
+    "networkId": "123",
+    "nodes": []
+  }
+}
diff --git a/test/test1/config/contracts.json b/test/test1/config/contracts.json
new file mode 100644
index 000000000..e63368fa9
--- /dev/null
+++ b/test/test1/config/contracts.json
@@ -0,0 +1,25 @@
+{
+  "default": {
+    "gas": "auto",
+    "contracts": {
+      "SimpleStorage": {
+        "args": [
+          100
+        ]
+      }
+    }
+  },
+  "myenv": {
+    "gas": "auto",
+    "contracts": {
+      "SimpleStorage": {
+        "gas": 123456
+      },
+      "Token": {
+        "args": [
+          200
+        ]
+      }
+    }
+  }
+}