diff --git a/docs/docs/how-to/incremental-commit.md b/docs/docs/how-to/incremental-commit.md
index 20604a6af19..f6e1efb7ec4 100644
--- a/docs/docs/how-to/incremental-commit.md
+++ b/docs/docs/how-to/incremental-commit.md
@@ -19,7 +19,7 @@ We can inspect the L1 utxo with:
 ```shell
 cardano-cli query utxo --whole-utxo
 ```
-and
+and the state of the faucet public key
 
 ```shell
 cardano-cli query utxo \
@@ -80,18 +80,19 @@ cardano-cli query utxo \
 
 
 Inspect the pending deposits:
+
 ```
 curl -X GET localhost:4001/commits
 
-["7fa05f9d5269d95452ed86bb7a32f2485245c781b61380673be0e33fb849c919"]
 ```
+and you should see the tx-id of the deposit transaction `["6b51f3787f5482004b258c60fe0c94775164f547d9284b6233bbb4f6f8b9dfa6"]`
 
 To recover, we can use the `/commits` endpoint again using the transaction id of the deposit:
 
 ```shell
-curl -X DELETE localhost:4001/commits/$(printf "\"7fa05f9d5269d95452ed86bb7a32f2485245c781b61380673be0e33fb849c919"\" | jq -sRr '@uri')
-OK
+curl -X DELETE localhost:4001/commits/$(printf "\"6b51f3787f5482004b258c60fe0c94775164f547d9284b6233bbb4f6f8b9dfa6"\" | jq -sRr '@uri')
 ```
+
 If we inspect the faucet funds again we will see that the locked deposit is now recovered
 
 ```shell
diff --git a/hydra-cluster/src/Hydra/Cluster/Scenarios.hs b/hydra-cluster/src/Hydra/Cluster/Scenarios.hs
index 73f42d11309..d22978c19b0 100644
--- a/hydra-cluster/src/Hydra/Cluster/Scenarios.hs
+++ b/hydra-cluster/src/Hydra/Cluster/Scenarios.hs
@@ -40,7 +40,6 @@ import Hydra.Cardano.Api (
   PaymentKey,
   Tx,
   TxId,
-  TxIn,
   UTxO,
   getTxBody,
   getTxId,
@@ -856,7 +855,7 @@ canSeePendingDeposits tracer workDir node hydraScriptsTxId =
         commitUTxO2 <- seedFromFaucet node walletVk 4_000_000 (contramap FromFaucet tracer)
         commitUTxO3 <- seedFromFaucet node walletVk 3_000_000 (contramap FromFaucet tracer)
 
-        flip evalStateT [] $ forM_ [commitUTxO, commitUTxO2, commitUTxO3] $ \utxo -> do
+        deposited <- flip execStateT [] $ forM [commitUTxO, commitUTxO2, commitUTxO3] $ \utxo -> do
           resp <-
             parseUrlThrow ("POST " <> hydraNodeBaseUrl n1 <> "/commit")
               <&> setRequestBodyJSON utxo
@@ -868,20 +867,36 @@ canSeePendingDeposits tracer workDir node hydraScriptsTxId =
 
           liftIO $ submitTx node tx
 
-          liftIO $ waitForAllMatch 10 [n1] $ \v -> do
+          liftIO $ waitForAllMatch 10 [n1] $ \v ->
             guard $ v ^? key "tag" == Just "CommitRecorded"
 
-          recoverResp <-
+          pendingDepositReq <-
             parseUrlThrow ("GET " <> hydraNodeBaseUrl n1 <> "/commits")
               >>= httpJSON
 
-          -- the issue doesn't specify the format of the response so we are
-          -- free to use whatever is convenient for the users ([TxIn]?)
-          let expectedResponse = fst . List.head . UTxO.pairs $ utxoFromTx tx
+          let expectedResponse = getTxId (getTxBody tx)
           _ <- modify (expectedResponse :)
           expected <- get
-          let expectedResp = getResponseBody recoverResp :: [TxIn]
+          let expectedResp = getResponseBody pendingDepositReq :: [TxId]
           liftIO $ expectedResp `shouldBe` expected
+
+        forM_ deposited $ \deposit -> do
+          let path = BSC.unpack $ urlEncode False $ encodeUtf8 $ T.pack $ show deposit
+          recoverResp <-
+            parseUrlThrow ("DELETE " <> hydraNodeBaseUrl n1 <> "/commits/" <> spy path)
+              >>= httpJSON
+
+          (getResponseBody recoverResp :: String) `shouldBe` "OK"
+
+          waitForAllMatch 10 [n1] $ \v -> do
+            guard $ v ^? key "tag" == Just "CommitRecovered"
+
+        pendingDepositReq <-
+          parseUrlThrow ("GET " <> hydraNodeBaseUrl n1 <> "/commits")
+            >>= httpJSON
+
+        let expectedResp = getResponseBody pendingDepositReq :: [TxId]
+        expectedResp `shouldBe` []
  where
   RunningNode{networkId, nodeSocket, blockTime} = node
 
diff --git a/hydra-cluster/src/HydraNode.hs b/hydra-cluster/src/HydraNode.hs
index 6e94076962c..3605cd89f4e 100644
--- a/hydra-cluster/src/HydraNode.hs
+++ b/hydra-cluster/src/HydraNode.hs
@@ -380,14 +380,14 @@ withHydraNode' tracer chainConfig workDir hydraNodeId hydraSKey hydraVKeys allNo
                 }
           )
             { std_out = maybe CreatePipe UseHandle mGivenStdOut
-            , std_err = Inherit
+            , std_err = CreatePipe
             }
 
     traceWith tracer $ HydraNodeCommandSpec $ show $ cmdspec p
 
     withCreateProcess p $ \_stdin mCreatedStdOut mCreatedStdErr processHandle ->
       case (mCreatedStdOut <|> mGivenStdOut, mCreatedStdErr) of
-        (Just out, Nothing) -> action out stderr processHandle
+        (Just out, Just err) -> action out err processHandle
         (Nothing, _) -> error "Should not happen™"
         (_, Nothing) -> error "Should not happen™"
  where
diff --git a/hydra-node/src/Hydra/Chain.hs b/hydra-node/src/Hydra/Chain.hs
index 1df7dbcf17e..20de71001c8 100644
--- a/hydra-node/src/Hydra/Chain.hs
+++ b/hydra-node/src/Hydra/Chain.hs
@@ -133,6 +133,7 @@ data OnChainTx tx
   | OnRecoverTx
       { headId :: HeadId
       , recoveredUTxO :: UTxOType tx
+      , recoveredTxId :: TxIdType tx
       }
   | OnIncrementTx
       { headId :: HeadId
diff --git a/hydra-node/src/Hydra/Chain/Direct/Handlers.hs b/hydra-node/src/Hydra/Chain/Direct/Handlers.hs
index b8d58ac6f21..73a22af8ef1 100644
--- a/hydra-node/src/Hydra/Chain/Direct/Handlers.hs
+++ b/hydra-node/src/Hydra/Chain/Direct/Handlers.hs
@@ -336,8 +336,8 @@ convertObservation = \case
     pure OnCollectComTx{headId}
   Deposit DepositObservation{headId, deposited, depositTxId, deadline, depositScriptUTxO} ->
     pure $ OnDepositTx{headId, deposited, depositTxId, deadline = posixToUTCTime deadline, depositScriptUTxO}
-  Recover RecoverObservation{headId, recoveredUTxO} ->
-    pure OnRecoverTx{headId, recoveredUTxO}
+  Recover RecoverObservation{headId, recoveredUTxO, recoveredTxId} ->
+    pure OnRecoverTx{headId, recoveredUTxO, recoveredTxId}
   Increment IncrementObservation{headId, newVersion, depositTxId} ->
     pure OnIncrementTx{headId, newVersion, depositTxId}
   Decrement DecrementObservation{headId, newVersion, distributedOutputs} ->
diff --git a/hydra-node/src/Hydra/HeadLogic.hs b/hydra-node/src/Hydra/HeadLogic.hs
index 8f43fb981ec..6bf9179b205 100644
--- a/hydra-node/src/Hydra/HeadLogic.hs
+++ b/hydra-node/src/Hydra/HeadLogic.hs
@@ -977,9 +977,10 @@ onOpenChainRecoverTx ::
   HeadId ->
   OpenState tx ->
   UTxOType tx ->
+  TxIdType tx ->
   Outcome tx
-onOpenChainRecoverTx headId st recoveredUTxO =
-  newState CommitRecovered{recoveredUTxO, newLocalUTxO = localUTxO `withoutUTxO` recoveredUTxO}
+onOpenChainRecoverTx headId st recoveredUTxO recoveredTxId =
+  newState CommitRecovered{recoveredUTxO, newLocalUTxO = localUTxO `withoutUTxO` recoveredUTxO, recoveredTxId}
     <> cause
       ( ClientEffect
           ServerOutput.CommitRecovered
@@ -1302,8 +1303,8 @@ update env ledger st ev = case (st, ev) of
     | ourHeadId == headId -> onOpenChainDepositTx headId env openState deposited depositTxId deadline depositScriptUTxO
     | otherwise ->
         Error NotOurHead{ourHeadId, otherHeadId = headId}
-  (Open openState@OpenState{headId = ourHeadId}, ChainInput Observation{observedTx = OnRecoverTx{headId, recoveredUTxO}})
-    | ourHeadId == headId -> onOpenChainRecoverTx headId openState recoveredUTxO
+  (Open openState@OpenState{headId = ourHeadId}, ChainInput Observation{observedTx = OnRecoverTx{headId, recoveredUTxO, recoveredTxId}})
+    | ourHeadId == headId -> onOpenChainRecoverTx headId openState recoveredUTxO recoveredTxId
     | otherwise ->
         Error NotOurHead{ourHeadId, otherHeadId = headId}
   (Open openState@OpenState{headId = ourHeadId}, ChainInput Observation{observedTx = OnIncrementTx{headId, newVersion, depositTxId}})
@@ -1421,7 +1422,7 @@ aggregate st = \case
        where
         CoordinatedHeadState{pendingDeposits = existingDeposits} = coordinatedHeadState
     _otherState -> st
-  CommitRecovered{newLocalUTxO} -> case st of
+  CommitRecovered{newLocalUTxO, recoveredTxId} -> case st of
     Open
       os@OpenState{coordinatedHeadState} ->
         Open
@@ -1429,9 +1430,11 @@ aggregate st = \case
             { coordinatedHeadState =
                 coordinatedHeadState
                   { localUTxO = newLocalUTxO
-                  , pendingDeposits = mempty
+                  , pendingDeposits = Map.delete (spy recoveredTxId) existingDeposits
                   }
             }
+       where
+        CoordinatedHeadState{pendingDeposits = existingDeposits} = coordinatedHeadState
     _otherState -> st
   DecommitRecorded{decommitTx, newLocalUTxO} -> case st of
     Open
diff --git a/hydra-node/src/Hydra/HeadLogic/Outcome.hs b/hydra-node/src/Hydra/HeadLogic/Outcome.hs
index d196d567a1c..3460cc47e6e 100644
--- a/hydra-node/src/Hydra/HeadLogic/Outcome.hs
+++ b/hydra-node/src/Hydra/HeadLogic/Outcome.hs
@@ -73,7 +73,7 @@ data StateChanged tx
       , newLocalUTxO :: UTxOType tx
       }
   | CommitRecorded {pendingDeposits :: PendingDeposits tx, newLocalUTxO :: UTxOType tx}
-  | CommitRecovered {recoveredUTxO :: UTxOType tx, newLocalUTxO :: UTxOType tx}
+  | CommitRecovered {recoveredUTxO :: UTxOType tx, newLocalUTxO :: UTxOType tx, recoveredTxId :: TxIdType tx}
   | DecommitRecorded {decommitTx :: tx, newLocalUTxO :: UTxOType tx}
   | SnapshotRequestDecided {snapshotNumber :: SnapshotNumber}
   | -- | A snapshot was requested by some party.
diff --git a/hydra-node/test/Hydra/BehaviorSpec.hs b/hydra-node/test/Hydra/BehaviorSpec.hs
index 10ad9dd9d67..6af28da8423 100644
--- a/hydra-node/test/Hydra/BehaviorSpec.hs
+++ b/hydra-node/test/Hydra/BehaviorSpec.hs
@@ -845,8 +845,8 @@ toOnChainTx now = \case
     OnAbortTx{headId = testHeadId}
   CollectComTx{headId} ->
     OnCollectComTx{headId}
-  RecoverTx{headId, utxoToDeposit} ->
-    OnRecoverTx{headId, recoveredUTxO = utxoToDeposit}
+  RecoverTx{headId, utxoToDeposit, recoverTxId} ->
+    OnRecoverTx{headId, recoveredUTxO = utxoToDeposit, recoveredTxId = recoverTxId}
   IncrementTx{headId, incrementingSnapshot, depositTxId} ->
     OnIncrementTx
       { headId
diff --git a/hydra-tx/src/Hydra/Tx/Recover.hs b/hydra-tx/src/Hydra/Tx/Recover.hs
index 25bef4a53f0..06c49a52991 100644
--- a/hydra-tx/src/Hydra/Tx/Recover.hs
+++ b/hydra-tx/src/Hydra/Tx/Recover.hs
@@ -50,6 +50,7 @@ recoverTx depositTxId deposited lowerBoundSlot =
 data RecoverObservation = RecoverObservation
   { headId :: HeadId
   , recoveredUTxO :: UTxO
+  , recoveredTxId :: TxId
   }
   deriving stock (Show, Eq, Generic)
 
@@ -60,7 +61,7 @@ observeRecoverTx ::
   Maybe RecoverObservation
 observeRecoverTx networkId utxo tx = do
   let inputUTxO = resolveInputsUTxO utxo tx
-  (_, depositOut) <- findTxOutByScript @PlutusScriptV2 inputUTxO depositScript
+  (TxIn depositTxId _, depositOut) <- findTxOutByScript @PlutusScriptV2 inputUTxO depositScript
   dat <- txOutScriptData $ toTxContext depositOut
   Deposit.DepositDatum (headCurrencySymbol, _, onChainDeposits) <- fromScriptData dat
   deposits <- do
@@ -76,6 +77,7 @@ observeRecoverTx networkId utxo tx = do
         ( RecoverObservation
             { headId
             , recoveredUTxO = deposits
+            , recoveredTxId = depositTxId
             }
         )
     else Nothing