diff --git a/frontend/src/lib/components/graph/FlowGraphV2.svelte b/frontend/src/lib/components/graph/FlowGraphV2.svelte
index cb63777683..667cc3c347 100644
--- a/frontend/src/lib/components/graph/FlowGraphV2.svelte
+++ b/frontend/src/lib/components/graph/FlowGraphV2.svelte
@@ -63,7 +63,7 @@
 	import NoteTool from './NoteTool.svelte'
 	import SelectionBoundingBox from './SelectionBoundingBox.svelte'
 	import GroupOverlay from './GroupOverlay.svelte'
-	import { getGroupEditorContext, computeGroupSpacing, GROUP_HEADER_HEIGHT, GROUP_TOP_MARGIN } from './groupEditor.svelte'
+	import { getGroupEditorContext, GROUP_HEADER_HEIGHT, GROUP_TOP_MARGIN } from './groupEditor.svelte'
 	import SelectionTool from './SelectionTool.svelte'
 	import PaneContextMenu from './PaneContextMenu.svelte'
 	import { SelectionManager } from './selectionUtils.svelte'
@@ -75,6 +75,9 @@
 	import { compoundLayout } from './compoundLayout'
 	import { deepEqual } from 'fast-equals'
 	import type { AssetWithAltAccessType } from '../assets/lib'
+	import { assetDisplaysAsInputInFlowGraph, assetDisplaysAsOutputInFlowGraph, NODE_WITH_READ_ASSET_Y_OFFSET, NODE_WITH_WRITE_ASSET_Y_OFFSET } from './renderers/nodes/AssetNode.svelte'
+	import { AI_TOOL_BASE_OFFSET, AI_TOOL_ROW_OFFSET, BELOW_ADDITIONAL_OFFSET } from './renderers/nodes/AIToolNode.svelte'
+	import { topologicalSort } from './graphBuilder.svelte'
 	import type { ModuleActionInfo } from '$lib/components/flows/flowDiff'
 	import { setGraphContext } from './graphContext'
 	import { computeNoteNodes } from './noteUtils.svelte'
@@ -345,15 +348,129 @@
 	type NodeDep = {
 		id: string
 		parentIds?: string[]
-		data?: { assets?: AssetWithAltAccessType[] }
+		data?: { assets?: AssetWithAltAccessType[]; module?: any }
 	}
 	type NodePos = { position: { x: number; y: number } }
-	let lastNodes: [NodeDep[], (NodeDep & NodePos)[]] | undefined = undefined
+	let lastNodes: [NodeDep[], Map<string, { top: number; bottom: number }> | undefined, (NodeDep & NodePos)[]] | undefined = undefined
 	let currentContainerDescendants: Map<string, string[]> = new Map()
 
-	function layoutNodes(nodes: NodeDep[]): (NodeDep & NodePos)[] {
-		let lastResult = lastNodes?.[1]
-		if (lastResult && deepEqual(nodes, lastNodes?.[0])) {
+	const MAX_TOOLS_PER_ROW = 2
+
+	/**
+	 * Pre-compute extra top/bottom space each node needs for decorations
+	 * (assets, AI tools, group headers, group notes).
+	 */
+	function computeNodeExtraSpace(
+		graphNodes: NodeDep[]
+	): Map<string, { top: number; bottom: number }> | undefined {
+		const extraSpace = new Map<string, { top: number; bottom: number }>()
+
+		// 1. Assets
+		if ($showAssets) {
+			for (const node of graphNodes) {
+				const assets = node.data?.assets ?? []
+				if (!assets.length) continue
+				const hasRead = assets.some(assetDisplaysAsInputInFlowGraph)
+				const hasWrite = assets.some(assetDisplaysAsOutputInFlowGraph)
+				if (hasRead || hasWrite) {
+					const prev = extraSpace.get(node.id) ?? { top: 0, bottom: 0 }
+					extraSpace.set(node.id, {
+						top: prev.top + (hasRead ? NODE_WITH_READ_ASSET_Y_OFFSET : 0),
+						bottom: prev.bottom + (hasWrite ? NODE_WITH_WRITE_ASSET_Y_OFFSET : 0)
+					})
+				}
+			}
+		}
+
+		// 2. AI tools
+		for (const node of graphNodes) {
+			const mod = node.data?.module
+			if (!mod || mod.value?.type !== 'aiagent') continue
+
+			const agentActions = !insertable && flowModuleStates?.[node.id]?.agent_actions
+
+			if (agentActions) {
+				// Execution mode: tools below
+				const totalRows = Math.ceil(agentActions.length / MAX_TOOLS_PER_ROW)
+				const space = AI_TOOL_BASE_OFFSET + AI_TOOL_ROW_OFFSET * totalRows + BELOW_ADDITIONAL_OFFSET
+				const prev = extraSpace.get(node.id) ?? { top: 0, bottom: 0 }
+				extraSpace.set(node.id, { top: prev.top, bottom: prev.bottom + space })
+			} else {
+				// Edit mode: tools above
+				const tools = mod.value.tools ?? []
+				const totalRows = Math.ceil(tools.length / MAX_TOOLS_PER_ROW) + (insertable ? 1 : 0)
+				const space = AI_TOOL_BASE_OFFSET + AI_TOOL_ROW_OFFSET * totalRows
+				const prev = extraSpace.get(node.id) ?? { top: 0, bottom: 0 }
+				extraSpace.set(node.id, { top: prev.top + space, bottom: prev.bottom })
+			}
+		}
+
+		// 3. Group notes (text above topmost node in each group note)
+		if (showNotes) {
+			const groupNotes = (notes ?? []).filter((n) => n.type === 'group')
+			if (groupNotes.length > 0) {
+				const sortedNodes = topologicalSort(graphNodes).reverse()
+				for (const groupNote of groupNotes) {
+					if (!groupNote.contained_node_ids?.length) continue
+					const topmostNodeId = sortedNodes.find((node) =>
+						groupNote.contained_node_ids?.includes(node.id)
+					)?.id
+					if (topmostNodeId) {
+						const textHeight = noteTextHeights[groupNote.id] || 60
+						const spacing = textHeight + 16 // padding
+						const prev = extraSpace.get(topmostNodeId) ?? { top: 0, bottom: 0 }
+						extraSpace.set(topmostNodeId, {
+							top: Math.max(prev.top, spacing + prev.top),
+							bottom: prev.bottom
+						})
+					}
+				}
+			}
+		}
+
+		// 4. Group headers (header + note + margin above topmost node in each group)
+		const groups = groupEditorContext?.groupEditor.getGroups() ?? []
+		if (groups.length > 0) {
+			const groupNoteHeights = showNotes ? (groupEditorContext?.groupEditor.getNoteHeights() ?? {}) : {}
+			// Need to find topmost node per group - use topological sort
+			const sortedNodes = topologicalSort(graphNodes).reverse()
+			for (const group of groups) {
+				if (group.module_ids.length === 0) continue
+				// Check if it's collapsed
+				const collapsedNodeId = `collapsed-group:${group.id}`
+				const hasCollapsedNode = graphNodes.some((n) => n.id === collapsedNodeId)
+				let topmostNodeId: string | undefined
+				let isCollapsed = false
+
+				if (hasCollapsedNode) {
+					topmostNodeId = collapsedNodeId
+					isCollapsed = true
+				} else {
+					topmostNodeId = sortedNodes.find((node) =>
+						group.module_ids.includes(node.id)
+					)?.id
+				}
+
+				if (topmostNodeId) {
+					const noteHeight = groupNoteHeights[group.id] ?? 0
+					const spacing = isCollapsed
+						? GROUP_HEADER_HEIGHT + noteHeight
+						: GROUP_HEADER_HEIGHT + noteHeight + GROUP_TOP_MARGIN
+					const prev = extraSpace.get(topmostNodeId) ?? { top: 0, bottom: 0 }
+					extraSpace.set(topmostNodeId, {
+						top: prev.top + spacing,
+						bottom: prev.bottom
+					})
+				}
+			}
+		}
+
+		return extraSpace.size > 0 ? extraSpace : undefined
+	}
+
+	function layoutNodes(nodes: NodeDep[], nodeExtraSpace?: Map<string, { top: number; bottom: number }>): (NodeDep & NodePos)[] {
+		let lastResult = lastNodes?.[2]
+		if (lastResult && deepEqual(nodes, lastNodes?.[0]) && deepEqual(nodeExtraSpace, lastNodes?.[1])) {
 			console.debug('layoutNodes', 'same nodes')
 			return lastResult
 		}
@@ -366,13 +483,13 @@
 			seenId.push(n.id)
 		}
 
-		// Run recursive compound layout
+		// Run recursive compound layout with pre-computed extra space
 		const { positions, bbox, containerDescendants: layoutContainerDescendants } = compoundLayout(nodes, {
 			nodeWidth: NODE.width,
 			nodeHeight: NODE.height,
 			gapH: NODE.gap.horizontal,
 			gapV: NODE.gap.vertical
-		})
+		}, nodeExtraSpace)
 
 		// Center horizontally
 		const xCenter = (fullSize ? fullWidth : width) / 2 - bbox.width / 2 - (width - fullWidth) / 2
@@ -385,7 +502,7 @@
 		}))
 
 		currentContainerDescendants = layoutContainerDescendants ?? new Map()
-		lastNodes = [nodes, newNodes]
+		lastNodes = [nodes, nodeExtraSpace, newNodes]
 		return newNodes
 	}
 
@@ -609,17 +726,20 @@
 			return
 		}
 
-		// console.log('compute')
+		const graphNodeDeps = Object.values(graph.nodes).map((n) => ({
+			id: n.id,
+			parentIds: n.parentIds,
+			data: { assets: (n.data as any).assets, module: (n.data as any).module }
+		}))
 
-		let layoutedNodes = layoutNodes(
-			Object.values(graph.nodes).map((n) => ({
-				id: n.id,
-				parentIds: n.parentIds,
-				data: { assets: (n.data as any).assets }
-			}))
-		)
+		// Pre-compute extra space per node for assets, AI tools, group notes, group headers
+		const nodeExtraSpace = computeNodeExtraSpace(graphNodeDeps)
+
+		// Layout with extra space baked into sugiyama
+		let layoutedNodes = layoutNodes(graphNodeDeps, nodeExtraSpace)
 		let newNodes: (Node & NodeLayout)[] = layoutedNodes.map((n) => ({ ...n, ...graph.nodes[n.id] }))
 
+		// Compute asset visual nodes (no position remapping)
 		let assetNodesResult = $showAssets
 			? computeAssetNodes(
 					newNodes.map((n) => ({
@@ -629,25 +749,17 @@
 					}))
 				)
 			: undefined
-		if (assetNodesResult) {
-			newNodes = newNodes.map((n) => ({
-				...n,
-				position: assetNodesResult.newNodePositions[n.id]
-			}))
-		}
-		let aiToolNodesResult = computeAIToolNodes(newNodes, eventHandler, insertable, flowModuleStates)
-		let nodesAfterAITools = newNodes.map((n) => ({
-			...n,
-			position: aiToolNodesResult.newNodePositions[n.id]
-		}))
 
-		let finalNodes = [
-			...nodesAfterAITools,
+		// Compute AI tool visual nodes (no position remapping)
+		let aiToolNodesResult = computeAIToolNodes(newNodes, eventHandler, insertable, flowModuleStates)
+
+		let finalNodes: (Node & NodeLayout)[] = [
+			...newNodes,
 			...(assetNodesResult?.newAssetNodes ?? []),
 			...aiToolNodesResult.toolNodes
 		]
 
-		// Compute note nodes and positions
+		// Compute note nodes (no position remapping)
 		let noteNodesResult = showNotes
 			? computeNoteNodes(
 					finalNodes.map((n) => ({
@@ -668,56 +780,35 @@
 				)
 			: undefined
 
-		// Apply note positioning to nodes if notes are enabled
-		if (noteNodesResult) {
-			finalNodes = finalNodes.map((n) => ({
-				...n,
-				position: noteNodesResult.newNodePositions[n.id] || n.position
-			}))
-		}
-
-		// Apply group label spacing (pushes nodes down like group notes do)
-		const groups = groupEditorContext?.groupEditor.getGroups() ?? []
-		if (groups.length > 0) {
-			const noteHeights = showNotes ? (groupEditorContext?.groupEditor.getNoteHeights() ?? {}) : {}
-			const groupPositions = computeGroupSpacing(
-				groups,
-				finalNodes.map((n) => ({ id: n.id, position: n.position })),
-				noteHeights
-			)
-			finalNodes = finalNodes.map((n) => ({
-				...n,
-				position: groupPositions[n.id] || n.position
-			}))
-		}
-
 		// Compute group header offsets for edges targeting topmost nodes in groups
+		const groups = groupEditorContext?.groupEditor.getGroups() ?? []
 		const groupHeaderOffsets: Record<string, number> = {}
-		if (groups.length > 0) {
-			const noteHeightsForEdges = showNotes ? (groupEditorContext?.groupEditor.getNoteHeights() ?? {}) : {}
+		if (groups.length > 0 && nodeExtraSpace) {
+			// Use nodeExtraSpace directly - nodes with group headers already have the space
+			// The offset for edges equals the group header + note portion of the topPadding
+			const groupNoteHeights = showNotes ? (groupEditorContext?.groupEditor.getNoteHeights() ?? {}) : {}
+			const sortedNodes = topologicalSort(graphNodeDeps).reverse()
 			for (const group of groups) {
 				if (group.module_ids.length === 0) continue
 				const collapsedNodeId = `collapsed-group:${group.id}`
-				let topY = Infinity
+				const hasCollapsedNode = graphNodeDeps.some((n) => n.id === collapsedNodeId)
 				let topNodeId: string | undefined
 				let isCollapsed = false
-				for (const node of finalNodes) {
-					if (node.id === collapsedNodeId && node.position.y < topY) {
-						topY = node.position.y
-						topNodeId = node.id
-						isCollapsed = true
-					} else if (group.module_ids.includes(node.id) && node.position.y < topY) {
-						topY = node.position.y
-						topNodeId = node.id
-						isCollapsed = false
-					}
+
+				if (hasCollapsedNode) {
+					topNodeId = collapsedNodeId
+					isCollapsed = true
+				} else {
+					topNodeId = sortedNodes.find((node) =>
+						group.module_ids.includes(node.id)
+					)?.id
 				}
+
 				if (topNodeId) {
-					const noteHeight = noteHeightsForEdges[group.id] ?? 0
+					const noteHeight = groupNoteHeights[group.id] ?? 0
 					const offset = isCollapsed
 						? GROUP_HEADER_HEIGHT + noteHeight
 						: GROUP_HEADER_HEIGHT + noteHeight + GROUP_TOP_MARGIN
-					// Only set if larger (a node could be topmost in multiple groups theoretically)
 					groupHeaderOffsets[topNodeId] = Math.max(groupHeaderOffsets[topNodeId] ?? 0, offset)
 				}
 			}
diff --git a/frontend/src/lib/components/graph/compoundLayout.ts b/frontend/src/lib/components/graph/compoundLayout.ts
index f793d4ce26..a1c66df892 100644
--- a/frontend/src/lib/components/graph/compoundLayout.ts
+++ b/frontend/src/lib/components/graph/compoundLayout.ts
@@ -231,6 +231,29 @@ function runSugiyama(
  * 5. Run sugiyama on the simplified graph
  * 6. Expand wrapper positions back to absolute positions
  */
+/**
+ * Build nodeSizes map for sugiyama from nodeExtraSpace.
+ * Each node's effective height = top + NODE.height + bottom.
+ */
+function buildNodeSizes(
+	nodeIds: string[],
+	constants: LayoutConstants,
+	nodeExtraSpace?: Map<string, { top: number; bottom: number }>
+): Map<string, { width: number; height: number }> | undefined {
+	if (!nodeExtraSpace || nodeExtraSpace.size === 0) return undefined
+	const sizes = new Map<string, { width: number; height: number }>()
+	for (const id of nodeIds) {
+		const extra = nodeExtraSpace.get(id)
+		if (extra && (extra.top > 0 || extra.bottom > 0)) {
+			sizes.set(id, {
+				width: constants.nodeWidth,
+				height: constants.nodeHeight + extra.top + extra.bottom
+			})
+		}
+	}
+	return sizes.size > 0 ? sizes : undefined
+}
+
 const MAX_RECURSION_DEPTH = 50
 
 function layoutLevel(
@@ -239,7 +262,8 @@ function layoutLevel(
 	constants: LayoutConstants,
 	childrenMap: Map<string, string[]>,
 	containerDescendants: Map<string, string[]>,
-	depth: number = 0
+	depth: number = 0,
+	nodeExtraSpace?: Map<string, { top: number; bottom: number }>
 ): LayoutResult {
 	const positions = new Map<string, { x: number; y: number }>()
 	const nodeIdSet = new Set(nodeIds)
@@ -258,8 +282,15 @@ function layoutLevel(
 			const n = allNodes.get(id)!
 			return { id, parentIds: (n.parentIds ?? []).filter((pid) => nodeIdSet.has(pid)) }
 		})
-		const result = runSugiyama(flatNodes, constants)
+		const extraSizes = buildNodeSizes(
+			flatNodes.map((n) => n.id),
+			constants,
+			nodeExtraSpace
+		)
+		const result = runSugiyama(flatNodes, constants, extraSizes)
 		for (const [id, pos] of result.positions) {
+			const extra = nodeExtraSpace?.get(id)
+			if (extra) pos.y += extra.top
 			positions.set(id, pos)
 		}
 		return { positions, bbox: { width: result.width, height: result.height }, contentMinX: 0 }
@@ -339,7 +370,8 @@ function layoutLevel(
 				constants,
 				childrenMap,
 				containerDescendants,
-				depth + 1
+				depth + 1,
+				nodeExtraSpace
 			)
 
 			branchLayouts.push({
@@ -413,13 +445,30 @@ function layoutLevel(
 	}
 
 	// Step 5: Run sugiyama on flattened nodes
-	const sugResult = runSugiyama(flatNodes, constants, wrapperSizes)
+	// Merge wrapperSizes with nodeExtraSpace-derived sizes for non-group nodes
+	const extraSizes = buildNodeSizes(
+		flatNodes.map((n) => n.id),
+		constants,
+		nodeExtraSpace
+	)
+	const mergedSizes = new Map<string, { width: number; height: number }>()
+	if (extraSizes) {
+		for (const [id, size] of extraSizes) mergedSizes.set(id, size)
+	}
+	for (const [id, size] of wrapperSizes) mergedSizes.set(id, size)
+	const sugResult = runSugiyama(
+		flatNodes,
+		constants,
+		mergedSizes.size > 0 ? mergedSizes : undefined
+	)
 
 	// Step 6: Resolve absolute positions
 	// First, set positions for regular (non-group) nodes
+	// Apply per-node y-offset from nodeExtraSpace so decorations above have room
 	for (const [nid, pos] of sugResult.positions) {
 		if (groupByHeadId.has(nid)) continue // Handle groups separately
-		positions.set(nid, { x: pos.x, y: pos.y })
+		const extra = nodeExtraSpace?.get(nid)
+		positions.set(nid, { x: pos.x, y: pos.y + (extra?.top ?? 0) })
 	}
 
 	// Now expand group wrappers into absolute positions
@@ -431,7 +480,9 @@ function layoutLevel(
 		const isBranch = gl.group.type === 'branch'
 
 		// Position the head node at the top-center of the wrapper
-		positions.set(headId, { x: wrapperPos.x, y: wrapperPos.y })
+		// Apply extra top padding so decorations above the head node have room
+		const headExtra = nodeExtraSpace?.get(headId)
+		positions.set(headId, { x: wrapperPos.x, y: wrapperPos.y + (headExtra?.top ?? 0) })
 
 		if (isBranch) {
 			// Reuse cached branchWidths and totalWidth
@@ -486,11 +537,13 @@ function layoutLevel(
 	let maxX = -Infinity
 	let minY = Infinity
 	let maxY = -Infinity
-	for (const pos of positions.values()) {
+	for (const [nid, pos] of positions) {
+		const extra = nodeExtraSpace?.get(nid)
 		minX = Math.min(minX, pos.x - constants.nodeWidth / 2)
 		maxX = Math.max(maxX, pos.x + constants.nodeWidth / 2)
-		minY = Math.min(minY, pos.y)
-		maxY = Math.max(maxY, pos.y + constants.nodeHeight)
+		// Account for top decoration space above the node
+		minY = Math.min(minY, pos.y - (extra?.top ?? 0))
+		maxY = Math.max(maxY, pos.y + constants.nodeHeight + (extra?.bottom ?? 0))
 	}
 	// Account for group wrapper extents in bbox (e.g. LOOP_INDENT makes wrappers wider than nodes)
 	for (const [headId, gl] of groupLayouts) {
@@ -518,10 +571,15 @@ function layoutLevel(
  *
  * Takes the flat list of nodes and edges from graphBuilder and produces
  * absolute positions that account for compound structure (branches, loops).
+ *
+ * nodeExtraSpace: per-node top/bottom padding that should be allocated in layout.
+ * After layout, each node's y is shifted down by its top padding so decorations
+ * (assets, AI tools, group headers) have room above.
  */
 export function compoundLayout(
 	nodes: { id: string; parentIds?: string[] }[],
-	constants?: Partial<LayoutConstants>
+	constants?: Partial<LayoutConstants>,
+	nodeExtraSpace?: Map<string, { top: number; bottom: number }>
 ): LayoutResult {
 	const c: LayoutConstants = {
 		nodeWidth: constants?.nodeWidth ?? NODE.width,
@@ -547,7 +605,15 @@ export function compoundLayout(
 
 	const nodeIds = nodes.map((n) => n.id)
 	const containerDescendants = new Map<string, string[]>()
-	const result = layoutLevel(nodeIds, allNodes, c, childrenMap, containerDescendants)
+	const result = layoutLevel(
+		nodeIds,
+		allNodes,
+		c,
+		childrenMap,
+		containerDescendants,
+		0,
+		nodeExtraSpace
+	)
 
 	// Shift positions so minX=0 (left-aligned).
 	// FlowGraphV2 centers with: xCenter = viewport/2 - bbox.width/2
diff --git a/frontend/src/lib/components/graph/noteUtils.svelte.ts b/frontend/src/lib/components/graph/noteUtils.svelte.ts
index 3350e07ce8..2fa147f267 100644
--- a/frontend/src/lib/components/graph/noteUtils.svelte.ts
+++ b/frontend/src/lib/components/graph/noteUtils.svelte.ts
@@ -19,13 +19,11 @@ export type NodeDep = {
 
 export type NoteComputeResult = {
 	noteNodes: (Node & NodeLayout)[]
-	newNodePositions: Record<string, { x: number; y: number }>
 }
 
 export type AIToolSpacingInfo = {
 	toolNodes: (Node & NodeLayout)[]
 	toolEdges: any[]
-	newNodePositions: Record<string, { x: number; y: number }>
 }
 
 export interface GroupNoteBounds {
@@ -283,14 +281,9 @@ export function computeNoteNodes(
 
 	const allNoteNodes: (Node & NodeLayout)[] = []
 
-	// Build a map of Y positions that need extra spacing for group notes
-	const yPosMap: Record<number, number> = {} // Y position -> spacing needed
-
-	// Group notes that need spacing
+	// Find topmost node per group note for layout calculation
 	const groupNotes = notes.filter((n) => n.type === 'group')
-
 	const topMostNodesMap: Record<string, string> = {}
-
 	const sortedNodes = topologicalSort(nodes).reverse()
 
 	for (const groupNote of groupNotes) {
@@ -298,47 +291,12 @@ export function computeNoteNodes(
 			const topmostNodeId = sortedNodes.find((node) =>
 				groupNote.contained_node_ids?.includes(node.id)
 			)?.id
-			const topmostNode = nodes.find((node) => node.id === topmostNodeId)
-			if (topmostNode) {
-				const textHeight = noteTextHeights[groupNote.id] || 60
-				const spacing = textHeight + 16 // padding
-				// Mark this Y position as needing spacing
-				yPosMap[topmostNode.position.y] = Math.max(yPosMap[topmostNode.position.y] || 0, spacing)
-				topMostNodesMap[groupNote.id] = topmostNode.id
+			if (topmostNodeId) {
+				topMostNodesMap[groupNote.id] = topmostNodeId
 			}
 		}
 	}
 
-	// Calculate new positions for nodes (offset by group notes)
-	const sortedNewNodes = nodes
-		.map((n) => ({ position: { ...n.position }, id: n.id }))
-		.sort((a, b) => a.position.y - b.position.y)
-
-	let currentYOffset = 0
-	let prevYPos = NaN
-
-	for (const node of sortedNewNodes) {
-		if (node.position.y !== prevYPos) {
-			// Add spacing for group notes at this Y level
-			if (yPosMap[node.position.y]) {
-				currentYOffset += yPosMap[node.position.y]
-			}
-			prevYPos = node.position.y
-		}
-		node.position.y += currentYOffset
-	}
-
-	// Create note nodes AFTER calculating adjusted node positions
-	// For group notes, we need to use the adjusted node positions
-	const adjustedNodes = sortedNewNodes.map((n) => {
-		const origNode = nodes.find((orig) => orig.id === n.id)
-		return {
-			...n,
-			data: origNode?.data,
-			type: origNode?.type
-		}
-	})
-
 	// Calculate all z-indexes at once using hierarchy information
 	const noteZIndexes = calculateAllNoteZIndexes(notes, nodes)
 
@@ -346,11 +304,11 @@ export function computeNoteNodes(
 		const isGroupNote = note.type === 'group'
 		const zIndex = noteZIndexes[note.id]
 
-		// Calculate position and size using adjusted node positions for group notes
+		// Calculate position and size using node positions for group notes
 		const { position, size } = isGroupNote
 			? calculateGroupNoteLayout(
 					note,
-					adjustedNodes,
+					nodes,
 					noteTextHeights[note.id] || 60,
 					topMostNodesMap[note.id]
 				)
@@ -375,13 +333,8 @@ export function computeNoteNodes(
 		allNoteNodes.push(noteNode)
 	}
 
-	const newNodePositions: Record<string, { x: number; y: number }> = Object.fromEntries(
-		sortedNewNodes.map((n) => [n.id, n.position])
-	)
-
 	const result: NoteComputeResult = {
-		noteNodes: allNoteNodes,
-		newNodePositions
+		noteNodes: allNoteNodes
 	}
 
 	// Cache the result
diff --git a/frontend/src/lib/components/graph/renderers/nodes/AIToolNode.svelte b/frontend/src/lib/components/graph/renderers/nodes/AIToolNode.svelte
index 28e9d58fa4..d7fda2b128 100644
--- a/frontend/src/lib/components/graph/renderers/nodes/AIToolNode.svelte
+++ b/frontend/src/lib/components/graph/renderers/nodes/AIToolNode.svelte
@@ -56,7 +56,6 @@
 	): {
 		toolNodes: (Node & NodeLayout)[]
 		toolEdges: Edge[]
-		newNodePositions: Record<string, { x: number; y: number }>
 	} {
 		if (
 			computeAIToolNodesCache &&
@@ -69,14 +68,6 @@
 		const allToolNodes: (Node & NodeLayout)[] = []
 		const allToolEdges: Edge[] = []
 
-		const yPosMap: Record<
-			number,
-			{
-				rows: number
-				placement: 'above' | 'below'
-			}
-		> = {}
-
 		for (const node of nodes) {
 			if (node.type !== 'module' || node.data.module.value.type !== 'aiagent') continue
 			// by default we assume we will show tools above
@@ -135,17 +126,6 @@
 			}
 
 			const totalRows = Math.ceil(tools.length / MAX_TOOLS_PER_ROW) + (insertable ? 1 : 0) // + 1 for add tool node when insertable
-			if (agentActions) {
-				yPosMap[node.position.y] = {
-					rows: totalRows,
-					placement: 'below'
-				}
-			} else {
-				yPosMap[node.position.y] = {
-					rows: totalRows,
-					placement: 'above'
-				}
-			}
 
 			const toolNodes: (Node & AiToolN)[] = tools.map((tool, i) => {
 				let inputToolXGap = 12
@@ -215,36 +195,9 @@
 			}
 		}
 
-		const sortedNewNodes = nodes
-			.filter((n) => n.type !== 'asset')
-			.map((n) => ({ id: n.id, position: $state.snapshot(n.position) }))
-			.sort((a, b) => a.position.y - b.position.y)
-		let currentYOffset = 0
-		let prevYPos = NaN
-		for (const node of sortedNewNodes) {
-			if (node.position.y !== prevYPos) {
-				// if agent actions, we need to shift the node above
-				if (yPosMap[prevYPos]?.placement === 'below') {
-					currentYOffset += AI_TOOL_BASE_OFFSET + AI_TOOL_ROW_OFFSET * yPosMap[prevYPos].rows
-				}
-				if (yPosMap[node.position.y]?.placement === 'above') {
-					currentYOffset += AI_TOOL_BASE_OFFSET + AI_TOOL_ROW_OFFSET * yPosMap[node.position.y].rows
-				}
-
-				prevYPos = node.position.y
-			}
-
-			node.position.y += currentYOffset
-		}
-
 		let ret: ReturnType<typeof computeAIToolNodes> = {
 			toolNodes: allToolNodes,
-			toolEdges: allToolEdges,
-			newNodePositions: Object.fromEntries(
-				sortedNewNodes.map((n) => {
-					return [n.id, n.position]
-				})
-			)
+			toolEdges: allToolEdges
 		}
 
 		computeAIToolNodesCache = {
diff --git a/frontend/src/lib/components/graph/renderers/nodes/AssetNode.svelte b/frontend/src/lib/components/graph/renderers/nodes/AssetNode.svelte
index aec1fb03f8..50e4f9c87a 100644
--- a/frontend/src/lib/components/graph/renderers/nodes/AssetNode.svelte
+++ b/frontend/src/lib/components/graph/renderers/nodes/AssetNode.svelte
@@ -19,8 +19,6 @@
 	export function computeAssetNodes(nodes: NodeDep[]): {
 		newAssetNodes: (Node & NodeLayout)[]
 		newAssetEdges: Edge[]
-		// Nodes need to be offset on the y axis to make space for the asset nodes
-		newNodePositions: Record<string, { x: number; y: number }>
 	} {
 		if (computeAssetNodesCache && deepEqual(nodes, computeAssetNodesCache[0])) {
 			return computeAssetNodesCache[1]
@@ -30,8 +28,6 @@
 		const allAssetNodes: (Node & NodeLayout)[] = []
 		const allAssetEdges: Edge[] = []
 
-		const yPosMap: Record<number, { r?: true; w?: true }> = {}
-
 		for (const node of nodes) {
 			const assets = node.data.assets ?? []
 			if (!assets.length) continue
@@ -47,13 +43,6 @@
 			const overflowedInputAssets = inputAssets.slice(3)
 			const overflowedOutputAssets = outputAssets.slice(3)
 
-			// This allows calculating which nodes to offset on the y axis to
-			// make space for the asset nodes
-			if (inputAssets.length || outputAssets.length)
-				yPosMap[node.position.y] = yPosMap[node.position.y] ?? {}
-			if (inputAssets.length) yPosMap[node.position.y].r = true
-			if (outputAssets.length) yPosMap[node.position.y].w = true
-
 			// All asset nodes displayed on top
 			const inputAssetNodes: (Node & AssetN)[] = displayedInputAssets.map((asset, i) => {
 				let inputAssetXGap = 12
@@ -187,26 +176,9 @@
 			})
 		}
 
-		// Shift all nodes to make space for the new asset nodes
-		const sortedNewNodes = nodes
-			.map((n) => ({ position: { ...n.position }, id: n.id }))
-			.sort((a, b) => a.position.y - b.position.y)
-
-		let currentYOffset = 0
-		let prevYPos = NaN
-		for (const node of sortedNewNodes) {
-			if (node.position.y !== prevYPos) {
-				if (yPosMap[prevYPos]?.w) currentYOffset += NODE_WITH_WRITE_ASSET_Y_OFFSET
-				if (yPosMap[node.position.y]?.r) currentYOffset += NODE_WITH_READ_ASSET_Y_OFFSET
-				prevYPos = node.position.y
-			}
-			node.position.y += currentYOffset
-		}
-
 		let ret: ReturnType<typeof computeAssetNodes> = {
 			newAssetNodes: allAssetNodes,
-			newAssetEdges: allAssetEdges,
-			newNodePositions: Object.fromEntries(sortedNewNodes.map((n) => [n.id, n.position]))
+			newAssetEdges: allAssetEdges
 		}
 		computeAssetNodesCache = [clone(nodes), ret]
 		return ret