diff --git a/package-lock.json b/package-lock.json
index 500db652a..e3e39a9f6 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -1,12 +1,12 @@
 {
   "name": "ocean-node",
-  "version": "3.1.11",
+  "version": "3.1.12",
   "lockfileVersion": 3,
   "requires": true,
   "packages": {
     "": {
       "name": "ocean-node",
-      "version": "3.1.11",
+      "version": "3.1.12",
       "hasInstallScript": true,
       "license": "Apache-2.0",
       "dependencies": {
diff --git a/package.json b/package.json
index bca6ee73c..fd00bd054 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "ocean-node",
-  "version": "3.1.11",
+  "version": "3.1.12",
   "description": "Ocean Node is used to run all core services in the Ocean stack",
   "author": "Ocean Protocol Foundation",
   "license": "Apache-2.0",
diff --git a/src/components/Indexer/processors/BaseProcessor.ts b/src/components/Indexer/processors/BaseProcessor.ts
index 95fa4439a..939260be0 100644
--- a/src/components/Indexer/processors/BaseProcessor.ts
+++ b/src/components/Indexer/processors/BaseProcessor.ts
@@ -210,9 +210,14 @@ export abstract class BaseEventProcessor {
   }
 
   protected checkDdoHash(decryptedDocument: any, documentHashFromContract: any): boolean {
-    const utf8Bytes = toUtf8Bytes(JSON.stringify(decryptedDocument))
+    const documentString = JSON.stringify(decryptedDocument)
+    const utf8Bytes = toUtf8Bytes(documentString)
     const expectedMetadata = hexlify(utf8Bytes)
-    if (create256Hash(expectedMetadata.toString()) !== documentHashFromContract) {
+    const validHashes = [
+      create256Hash(expectedMetadata.toString()),
+      create256Hash(documentString)
+    ]
+    if (!validHashes.includes(documentHashFromContract)) {
       INDEXER_LOGGER.error(`DDO checksum does not match.`)
       return false
     }
@@ -317,6 +322,9 @@ export abstract class BaseEventProcessor {
               chainId,
               decrypterAddress: ethAddress,
               dataNftAddress: contractAddress,
+              encryptedDocument: txId ? undefined : metadata,
+              flags: parseInt(flag),
+              documentHash: metadataHash || undefined,
               signature,
               nonce
             }
@@ -383,7 +391,7 @@ export abstract class BaseEventProcessor {
             ddo = JSON.parse(response.data)
             responseHash = create256Hash(ddo)
           }
-          if (responseHash !== metadataHash) {
+          if (metadataHash && responseHash !== metadataHash) {
             const msg = `Hash check failed: response=${ddo}, decrypted ddo hash=${responseHash}\n metadata hash=${metadataHash}`
             INDEXER_LOGGER.log(LOG_LEVELS_STR.LEVEL_ERROR, msg)
             throw new Error(msg)
@@ -429,6 +437,7 @@ export abstract class BaseEventProcessor {
             decrypterAddress: ethAddress,
             chainId,
             encryptedDocument: metadata,
+            flags: parseInt(flag),
             documentHash: metadataHash,
             dataNftAddress: contractAddress,
             signature,
@@ -491,6 +500,7 @@ export abstract class BaseEventProcessor {
               decrypterAddress: ethAddress,
               chainId,
               encryptedDocument: metadata,
+              flags: parseInt(flag),
               documentHash: metadataHash,
               dataNftAddress: contractAddress,
               signature,
diff --git a/src/components/Indexer/processors/MetadataEventProcessor.ts b/src/components/Indexer/processors/MetadataEventProcessor.ts
index 82b6162f1..f618c85c7 100644
--- a/src/components/Indexer/processors/MetadataEventProcessor.ts
+++ b/src/components/Indexer/processors/MetadataEventProcessor.ts
@@ -23,6 +23,16 @@ import { getConfiguration } from '../../../utils/config.js'
 import { isRemoteDDO } from '../../core/utils/validateDdoHandler.js'
 
 export class MetadataEventProcessor extends BaseEventProcessor {
+  private isDDO(data: any): data is Record<string, any> {
+    return (
+      data &&
+      typeof data === 'object' &&
+      !Array.isArray(data) &&
+      typeof data.id === 'string' &&
+      typeof data.version === 'string'
+    )
+  }
+
   async processEvent(
     event: ethers.Log,
     chainId: number,
@@ -122,25 +132,57 @@ export class MetadataEventProcessor extends BaseEventProcessor {
         metadataHash,
         metadata
       )
+      const isRemoteMetadata = isRemoteDDO(decryptDDO)
+      const isEncryptedMetadata = (parseInt(flag) & 2) !== 0
       let ddo = await this.processDDO(decryptDDO)
-      if (
-        !isRemoteDDO(decryptDDO) &&
-        parseInt(flag) !== 2 &&
-        !this.checkDdoHash(ddo, metadataHash)
-      ) {
+      if (!isEncryptedMetadata && !this.checkDdoHash(ddo, metadataHash)) {
         return
       }
       if (ddo.encryptedData) {
+        let { encryptedData } = ddo
+        if ((parseInt(flag) & 2) !== 0) {
+          try {
+            const decryptedIpfsPayload = await this.decryptDDO(
+              decodedEventData.args[2],
+              flag,
+              owner,
+              event.address,
+              chainId,
+              '',
+              '',
+              ddo.encryptedData
+            )
+            encryptedData = decryptedIpfsPayload.encryptedData || encryptedData
+          } catch (error) {
+            INDEXER_LOGGER.log(
+              LOG_LEVELS_STR.LEVEL_ERROR,
+              `Unable to decrypt encrypted IPFS DDO payload, trying plaintext payload fallback: ${
+                error instanceof Error ? error.message : String(error)
+              }`
+            )
+          }
+        }
+
         const proof = await this.decryptDDOIPFS(
           decodedEventData.args[2],
           owner,
-          ddo.encryptedData
+          encryptedData
         )
-        const data = this.getDataFromProof(proof)
-        const ddoInstance = DDOManager.getDDOClass(data.ddoObj)
-        ddo = ddoInstance.updateFields({
-          proof: { signature: data.signature, header: data.header }
-        })
+        const data = typeof proof === 'string' ? this.getDataFromProof(proof) : null
+
+        const ddoObj = data?.ddoObj || (this.isDDO(proof) ? proof : null)
+        if (!ddoObj) {
+          throw new Error(
+            'IPFS encryptedData payload is neither a DDO nor a supported DDO proof.'
+          )
+        }
+        const ddoInstance = DDOManager.getDDOClass(ddoObj)
+        ddo =
+          data?.signature && data?.header
+            ? ddoInstance.updateFields({
+                proof: { signature: data.signature, header: data.header }
+              })
+            : ddoInstance.getDDOData()
       }
       const clonedDdo = structuredClone(ddo)
       const updatedDdo = deleteIndexedMetadataIfExists(clonedDdo)
@@ -159,8 +201,12 @@ export class MetadataEventProcessor extends BaseEventProcessor {
         )
         return
       }
-      // for unencrypted DDOs
-      if ((parseInt(flag) & 2) === 0 && !this.checkDdoHash(updatedDdo, metadataHash)) {
+      // for unencrypted inline DDOs
+      if (
+        !isRemoteMetadata &&
+        !isEncryptedMetadata &&
+        !this.checkDdoHash(updatedDdo, metadataHash)
+      ) {
         INDEXER_LOGGER.error('Unencrypted DDO hash does not match metadata hash.')
         await ddoState.update(
           this.networkId,
diff --git a/src/components/core/handler/ddoHandler.ts b/src/components/core/handler/ddoHandler.ts
index 13f281219..b33e5fedc 100644
--- a/src/components/core/handler/ddoHandler.ts
+++ b/src/components/core/handler/ddoHandler.ts
@@ -357,7 +357,7 @@ export class DecryptDdoHandler extends CommandHandler {
       } else {
         // checksum matches
         const decryptedDocumentHash = create256Hash(decryptedDocument.toString())
-        if (decryptedDocumentHash !== documentHash) {
+        if (documentHash && decryptedDocumentHash !== documentHash) {
           return {
             stream: null,
             status: {