diff --git a/apps/amm/tests/README.md b/apps/amm/tests/README.md
index efc7a15..62fdf8f 100644
--- a/apps/amm/tests/README.md
+++ b/apps/amm/tests/README.md
@@ -52,9 +52,15 @@ nix build .#integration-test -L
 
 ## Notes
 
-- **Wallet password.** The isolated wallet is restored with password `test`
-  (`TEST_WALLET_PASSWORD`). If the UI shows the **Connect** modal instead of
-  auto-opening, unlock with `test`.
+- **Wallet password.** The wallet's key storage is encrypted with a password,
+  which you enter to **unlock** the wallet so the app can sign transactions (the
+  UI's **Connect** modal). During first-time setup you're prompted once for a
+  password (read from the terminal — it can't be scripted), but **that wallet is
+  a throwaway**: `restore-keys` then rebuilds it from the test mnemonic and sets
+  the **real** password to `TEST_WALLET_PASSWORD` (default `test`). So type
+  anything at the setup prompt; **unlock the UI with `test`** — not whatever you
+  typed there. Prefer no password? Run with `TEST_WALLET_PASSWORD=""` and unlock
+  with an empty password everywhere.
 - **Re-bootstrap.** `FORCE_BOOTSTRAP=1 apps/amm/tests/testnet/setup-amm-testnet.sh`
   re-restores the isolated `.wallet` (rewrites only that directory).
 - **Overrides.** `TEST_WALLET_HOME`, `TEST_MNEMONIC`, `TEST_WALLET_PASSWORD`,
diff --git a/apps/amm/tests/testnet/setup-amm-testnet.sh b/apps/amm/tests/testnet/setup-amm-testnet.sh
index a361973..c522f9d 100755
--- a/apps/amm/tests/testnet/setup-amm-testnet.sh
+++ b/apps/amm/tests/testnet/setup-amm-testnet.sh
@@ -182,16 +182,18 @@ bootstrap_test_wallet() {
 
   if [ -n "$TEST_SEQUENCER_ADDR" ]; then
     log "${DIM}\$ wallet config set sequencer_addr $TEST_SEQUENCER_ADDR${RST}"
-    # On a fresh home this triggers first-time wallet setup, which prompts for a
-    # password (and generates a throwaway random seed). Feed the password via
-    # stdin so the bootstrap stays non-interactive; restore-keys below then
-    # replaces those keys with the deterministic test mnemonic.
-    printf '%s\n' "$TEST_WALLET_PASSWORD" \
-      | wallet config set sequencer_addr "$TEST_SEQUENCER_ADDR" \
+    # NOTE: on a fresh home this triggers first-time wallet setup, which
+    # generates a THROWAWAY random-seed wallet and prompts once for a password
+    # (read from the terminal, so it can't be piped — just type anything, even
+    # empty). That wallet is immediately discarded: restore-keys below rebuilds
+    # the wallet from the test mnemonic and sets the REAL password to
+    # $TEST_WALLET_PASSWORD, which is what unlocks the wallet afterward.
+    wallet config set sequencer_addr "$TEST_SEQUENCER_ADDR" \
       || log "${YEL}⚠ 'wallet config set sequencer_addr' failed — configure the wallet manually.${RST}"
   fi
 
-  # restore-keys reads the mnemonic then the password from stdin.
+  # restore-keys reads the mnemonic then the password from stdin (non-interactive)
+  # and REWRITES storage — so the wallet's password becomes $TEST_WALLET_PASSWORD.
   log "${DIM}\$ printf '<mnemonic>\\n<password>\\n' | wallet restore-keys --depth $TEST_WALLET_DEPTH${RST}"
   printf '%s\n%s\n' "$TEST_MNEMONIC" "$TEST_WALLET_PASSWORD" \
     | wallet restore-keys --depth "$TEST_WALLET_DEPTH" \