diff --git a/ethcore/light/src/net/mod.rs b/ethcore/light/src/net/mod.rs
index ba6444184b4..4230d6559d0 100644
--- a/ethcore/light/src/net/mod.rs
+++ b/ethcore/light/src/net/mod.rs
@@ -114,9 +114,9 @@ mod packet {
 mod timeout {
 	use std::time::Duration;
 
-	pub const HANDSHAKE: Duration =  Duration::from_millis(2500);
-	pub const ACKNOWLEDGE_UPDATE: Duration = Duration::from_millis(5000);
-	pub const BASE: u64 = 1500; // base timeout for packet.
+	pub const HANDSHAKE: Duration =  Duration::from_millis(4_000);
+	pub const ACKNOWLEDGE_UPDATE: Duration = Duration::from_millis(5_000);
+	pub const BASE: u64 = 2500; // base timeout for packet.
 
 	// timeouts per request within packet.
 	pub const HEADERS: u64 = 250; // per header?
diff --git a/util/network-devp2p/src/host.rs b/util/network-devp2p/src/host.rs
index 0a3668971df..2df8fdcbf39 100644
--- a/util/network-devp2p/src/host.rs
+++ b/util/network-devp2p/src/host.rs
@@ -160,6 +160,7 @@ impl<'s> NetworkContextTrait for NetworkContext<'s> {
 	}
 
 	fn disconnect_peer(&self, peer: PeerId) {
+		trace!(target: "network", "Peer disconnect requested: {}", peer);
 		self.io.message(NetworkIoMessage::Disconnect(peer))
 			.unwrap_or_else(|e| warn!("Error sending network IO message: {:?}", e));
 	}
@@ -687,7 +688,7 @@ impl Host {
 						Err(e) => {
 							let s = session.lock();
 							trace!(target: "network", "Session read error: {}:{:?} ({:?}) {:?}", token, s.id(), s.remote_addr(), e);
-							if let ErrorKind::Disconnect(DisconnectReason::IncompatibleProtocol) = *e.kind() {
+							if let ErrorKind::Disconnect(DisconnectReason::UselessPeer) = *e.kind() {
 								if let Some(id) = s.id() {
 									if !self.reserved_nodes.read().contains(id) {
 										self.nodes.write().mark_as_useless(id);
@@ -720,11 +721,24 @@ impl Host {
 							// Outgoing connections are allowed as long as their count is <= min_peers
 							// Incoming connections are allowed to take all of the max_peers reserve, or at most half of the slots.
 							let max_ingress = max(max_peers - min_peers, min_peers / 2);
-							if reserved_only ||
-								(s.info.originated && egress_count > min_peers) ||
-								(!s.info.originated && ingress_count > max_ingress) {
-								// only proceed if the connecting peer is reserved.
-								if !self.reserved_nodes.read().contains(&id) {
+							if reserved_only
+								|| (s.info.originated && egress_count > min_peers)
+								|| (!s.info.originated && ingress_count > max_ingress)
+							{
+								// We didn't start the connection, but the node is known to us
+								// So eventually we will attempt to connect to it as well.
+								let is_incoming_but_known = !s.info.originated && self.nodes.read().contains(&id);
+
+								if is_incoming_but_known {
+									warn!(target: "network", "Allowing incoming connection from a known node.");
+								}
+								// only proceed if the connecting peer is reserved or is known
+								if !is_incoming_but_known && !self.reserved_nodes.read().contains(&id) {
+									trace!(
+										target: "network",
+										"Rejected {} session: TooManyPeers",
+										if s.info.originated { "outbound" } else { "inbound" }
+									);
 									s.disconnect(io, DisconnectReason::TooManyPeers);
 									kill = true;
 									break;