diff --git a/.github/workflows/build-images.yaml b/.github/workflows/build-images.yaml
index a7e19e385..5cf8e2034 100644
--- a/.github/workflows/build-images.yaml
+++ b/.github/workflows/build-images.yaml
@@ -170,7 +170,7 @@ jobs:
         run: |
           docker pull --quiet $IMAGE
           ID=$(docker create $IMAGE true)
-          docker cp ${ID}:/vmlinuz neonvm/hack/kernel/vmlinuz
+          docker cp ${ID}:/vmlinuz neonvm-kernel/vmlinuz
           docker rm -f ${ID}
 
       - name: Build and push neonvm-runner image
@@ -179,7 +179,7 @@ jobs:
           context: .
           platforms: linux/amd64
           push: true
-          file: neonvm/runner/Dockerfile
+          file: neonvm-runner/Dockerfile
           cache-from: type=registry,ref=cache.neon.build/neonvm-runner:cache
           cache-to: ${{ github.ref_name == 'main' && 'type=registry,ref=cache.neon.build/neonvm-runner:cache,mode=max' || '' }}
           tags: ${{ needs.tags.outputs.runner }}
@@ -201,7 +201,7 @@ jobs:
           context: .
           platforms: linux/amd64
           push: true
-          file: neonvm/Dockerfile
+          file: neonvm-controller/Dockerfile
           cache-from: type=registry,ref=cache.neon.build/neonvm-controller:cache
           cache-to: ${{ github.ref_name == 'main' && 'type=registry,ref=cache.neon.build/neonvm-controller:cache,mode=max' || '' }}
           tags: ${{ needs.tags.outputs.controller }}
@@ -215,7 +215,7 @@ jobs:
           context: .
           platforms: linux/amd64
           push: true
-          file: neonvm/tools/vxlan/Dockerfile
+          file: neonvm-vxlan-controller/Dockerfile
           cache-from: type=registry,ref=cache.neon.build/neonvm-vxlan-controller:cache
           cache-to: ${{ github.ref_name == 'main' && 'type=registry,ref=cache.neon.build/neonvm-vxlan-controller:cache,mode=max' || '' }}
           tags: ${{ needs.tags.outputs.vxlan-controller }}
@@ -226,7 +226,7 @@ jobs:
           context: .
           platforms: linux/amd64
           push: true
-          file: build/autoscale-scheduler/Dockerfile
+          file: autoscale-scheduler/Dockerfile
           cache-from: type=registry,ref=cache.neon.build/autoscale-scheduler:cache
           cache-to: ${{ github.ref_name == 'main' && 'type=registry,ref=cache.neon.build/autoscale-scheduler:cache,mode=max' || '' }}
           tags: ${{ needs.tags.outputs.scheduler }}
@@ -239,7 +239,7 @@ jobs:
           context: .
           platforms: linux/amd64
           push: true
-          file: build/autoscaler-agent/Dockerfile
+          file: autoscaler-agent/Dockerfile
           cache-from: type=registry,ref=cache.neon.build/autoscaler-agent:cache
           cache-to: ${{ github.ref_name == 'main' && 'type=registry,ref=cache.neon.build/autoscaler-agent:cache,mode=max' || '' }}
           tags: ${{ needs.tags.outputs.autoscaler-agent }}
diff --git a/.github/workflows/e2e-test.yaml b/.github/workflows/e2e-test.yaml
index 1a238e6a5..b040bdd50 100644
--- a/.github/workflows/e2e-test.yaml
+++ b/.github/workflows/e2e-test.yaml
@@ -174,9 +174,11 @@ jobs:
           kubectl apply -f $(rendered neonvm-runner-image-loader.yaml)
           kubectl -n neonvm-system rollout status daemonset neonvm-runner-image-loader
           kubectl apply -f $(rendered neonvm.yaml)
-          kubectl -n neonvm-system rollout status daemonset  neonvm-device-plugin
-          kubectl -n neonvm-system rollout status daemonset  neonvm-vxlan-controller
+          kubectl -n neonvm-system rollout status daemonset neonvm-device-plugin
+          kubectl apply -f $(rendered neonvm-controller.yaml)
           kubectl -n neonvm-system rollout status deployment neonvm-controller
+          kubectl apply -f $(rendered neonvm-vxlan-controller.yaml)
+          kubectl -n neonvm-system rollout status daemonset neonvm-vxlan-controller
           kubectl apply -f $(rendered autoscale-scheduler.yaml)
           kubectl -n kube-system rollout status deployment autoscale-scheduler
           kubectl apply -f $(rendered autoscaler-agent.yaml)
diff --git a/.github/workflows/release.yaml b/.github/workflows/release.yaml
index 97bf07d18..e706346ad 100644
--- a/.github/workflows/release.yaml
+++ b/.github/workflows/release.yaml
@@ -88,6 +88,8 @@ jobs:
             rendered_manifests/autoscale-scheduler.yaml
             rendered_manifests/autoscaler-agent.yaml
             rendered_manifests/neonvm.yaml
+            rendered_manifests/neonvm-controller.yaml
+            rendered_manifests/neonvm-vxlan-controller.yaml
             rendered_manifests/neonvm-runner-image-loader.yaml
             rendered_manifests/multus.yaml
             rendered_manifests/multus-eks.yaml
diff --git a/.github/workflows/vm-kernel.yaml b/.github/workflows/vm-kernel.yaml
index ea0c129af..cdbfd99e3 100644
--- a/.github/workflows/vm-kernel.yaml
+++ b/.github/workflows/vm-kernel.yaml
@@ -60,7 +60,7 @@ jobs:
               -H "Accept: application/vnd.github+json" \
               -H "X-GitHub-Api-Version: 2022-11-28" \
               --method GET \
-              --field path=neonvm/hack/kernel \
+              --field path=neonvm-kernel \
               --field sha=${COMMIT_SHA} \
               --field per_page=1 \
               --jq ".[0].sha" \
@@ -165,8 +165,8 @@ jobs:
       - name: get kernel version
         id: get-kernel-version
         run: |
-          linux_config=$(ls neonvm/hack/kernel/linux-config-*)  # returns something like "neonvm/hack/kernel/linux-config-6.1.63"
-          kernel_version=${linux_config##*-}                    # returns something like "6.1.63"
+          linux_config=$(ls neonvm-kernel/linux-config-*)  # returns something like "neonvm-kernel/linux-config-6.1.63"
+          kernel_version=${linux_config##*-}               # returns something like "6.1.63"
 
           echo VM_KERNEL_VERSION=$kernel_version >> $GITHUB_OUTPUT
 
@@ -192,12 +192,12 @@ jobs:
         uses: docker/build-push-action@v6
         with:
           build-args: KERNEL_VERSION=${{ steps.get-kernel-version.outputs.VM_KERNEL_VERSION }}
-          context: neonvm/hack/kernel
+          context: neonvm-kernel
           platforms: linux/amd64
           # Push kernel image only for scheduled builds or if workflow_dispatch/workflow_call input is true
           push: true
           pull: true
-          file: neonvm/hack/kernel/Dockerfile.kernel-builder
+          file: neonvm-kernel/Dockerfile.kernel-builder
           cache-from: type=registry,ref=cache.neon.build/vm-kernel:cache
           cache-to: ${{ github.ref_name == 'main' && 'type=registry,ref=cache.neon.build/vm-kernel:cache,mode=max' || '' }}
           tags: ${{ steps.get-tags.outputs.tags }}
diff --git a/.gitignore b/.gitignore
index 9538b2e24..1d0523c60 100644
--- a/.gitignore
+++ b/.gitignore
@@ -25,6 +25,7 @@ cover.html
 *~
 
 *.qcow2
+# todo: remove old kernel location
 neonvm/hack/kernel/vmlinuz
 
 rendered_manifests
diff --git a/ARCHITECTURE.md b/ARCHITECTURE.md
index 55326b779..bd4b0fa9c 100644
--- a/ARCHITECTURE.md
+++ b/ARCHITECTURE.md
@@ -36,20 +36,25 @@ This isn't the only architecture document. You may also want to look at:
 
 ## High-level overview
 
-At a high level, this repository provides two components:
+At a high level, this repository provides five components with a non-trivial amount of code:
 
-1. A modified Kubernetes scheduler (using the [plugin interface]) — known as "the (scheduler)
+1. A Kubernetes custom resource definition (CRD) and controller (`neonvm-controller`) for managing
+   resizeable VMs — NeonVM.
+2. The underlying NeonVM pods run `neonvm-runner`
+3. NeonVM virtual machine images are built with `vm-builder`
+4. A modified Kubernetes scheduler (using the [plugin interface]) — known as "the (scheduler)
    plugin", `AutoscaleEnforcer`, `autoscale-scheduler`
-2. A daemonset responsible for making VM scaling decisions & checking with interested parties
+5. A daemonset responsible for making VM scaling decisions & checking with interested parties
    — known as `autoscaler-agent` or simply `agent`
 
-A third component, a binary running inside of the VM to (a) handle being upscaled
+One last component, a binary running inside of the VM to (a) handle being upscaled
 (b) validate that downscaling is ok, and (c) request immediate upscaling due to sharp changes in demand
-— known as "the (VM) monitor", lives in
-[`neondatabase/vm-monitor`](https://github.com/neondatabase/vm-monitor)
+— known as "the (VM) monitor", lives in [`neondatabase/neon/.../vm-monitor`].
 
 [plugin interface]: https://kubernetes.io/docs/concepts/scheduling-eviction/scheduling-framework/
 
+For information on NeonVM, see [README-NeonVM.md](./README-NeonVM.md).
+
 The scheduler plugin is responsible for handling resource requests from the `autoscaler-agent`,
 capping increases so that node resources aren't overcommitted.
 
@@ -81,48 +86,47 @@ discussed more in the [high-level consequences] section below.
 
 ## Repository structure
 
-* `build/` — scripts for building the scheduler (`autoscale-scheduler`) and `autoscaler-agent`
-* `cluster-autoscaler/` — patch and Dockerfile for building a NeonVM-compatible [cluster-autoscaler]
-* `cmd/` — entrypoints for the `autoscaler-agent` and scheduler plugin. Very little
-    functionality implemented here. (See: `pkg/agent` and `pkg/plugin`)
-* `deploy/` — YAML files used during cluster init. Of these, only the following two are manually
-  written:
-    * `deploy/autoscaler-agent.yaml`
-    * `deploy/autoscale-scheduler.yaml`
-* `kind/` — files specific to creating our [kind](https://kind.sigs.k8s.io/) cluster
-    * `kind/config.yaml` — configuration for the kind cluster
-* `neonvm/` — QEMU-based virtualisation API and controllers for k8s
-   * See [`neonvm/README.md`](./neonvm/README.md) for details
-* `pkg/` — core go code from the scheduler plugin and `autoscaler-agent`. Where applicable, the
-  purpose of individual files is commented at the top.
-    * `pkg/agent/` — implementation of `autoscaler-agent`
-    * `pkg/api/` — all types for inter-component communications, plus some protocol-relevant types
-        independently used by multiple components.
-    * `pkg/billing/` — consumption metrics API, primarily used in
-        [`pkg/agent/billing.go`](pkg/agent/billing.go)
-    * `pkg/plugin/` — implementation of the scheduler plugin
-    * `pkg/util/` — miscellaneous utilities that are too general to be included in `agent` or
-      `plugin`.
-* `scripts/` — a collection of scripts for common tasks. Items of note:
-    * `scripts/patch-*.json` — patches for testing live-updating of a VM or config
-    * `scripts/replace-scheduler.sh` — replaces the currently running scheduler, for quick redeploy
-    * `scripts/repeat-delete-scheduler.sh` — repeatedly deletes the scheduler (which will be
-        recreated by the deployment). For debugging.
-    * `scripts/run-bench.sh` — starts a CPU-intensive pgbench connected to a VM. Useful to watch
-      the TPS and get confirmation that autoscaled CPUs are being used.
-    * `scripts/scheduler-logs.sh` — convenience script to tail the scheduler's logs
-    * `scripts/ssh-into-vm.sh` — `ssh`es into a VM. Useful for debugging.
-    * `scripts/start-vm-bridge.sh`
-* `tests/` — end-to-end tests
+At a high level, each component gets its own directory and resulting YAML for its deployment, where
+applicable.
+
+These are:
+
+* `autoscale-scheduler` — the scheduler (with our plugin)
+* `autoscaler-agent`
+* `cluster-autoscaler` — patch for building a NeonVM-compatible [cluster-autoscaler]
+* `neonvm` — CRDs and other related YAMLs for NeonVM, alongside Go definitions and a generated
+    client. Note that the generated YAML includes a dependency on `neonvm-controller` via a webhook
+    for create/update/delete operations on the CRDs.
+* `neonvm-controller` — controller for the NeonVM CRDs
+* `neonvm-kernel` — files relating to the virtual machine kernel we use in NeonVM
+* `neonvm-runner` — per-VM management process, created by `neonvm-controller`
+* `neonvm-vxlan-controller`
+* `vm-builder` — binary for building VM images for use by NeonVM
+
+[cluster-autoscaler]: https://github.com/kubernetes/autoscaler/tree/master/cluster-autoscaler
+
+Each component directory contains:
+
+* `cmd/` — the entrypoint of the component, containing `main.go`
+* `Dockerfile` — for building the component, if applicable
+* `kustomize.yaml` — if the component is separately deployed, instructions for how Kustomize should
+    generate the YAML
+* `*.yaml` — if the component is separately deployed, there will be other YAML files as the
+    resources for Kustomize to include -- e.g. `daemonset.yaml` or `config_map.yaml`.
+
+### Other directories
+
+* `k3d/` and `kind/` — configuration for local test clusters
+* `pkg/` — the bulk of the Go codebase. For more complex components, `cmd/main.go` often just calls
+    the relevant entrypoint function in its `pkg/` directory. `pkg/` also includes the common
+    packages shared by multiple components.
+* `scripts` — a collection of scripts for common tasks
+* `tests` — end-to-end tests
     * `tests/e2e` — [`kuttl`](https://kuttl.dev/) test scenarios itself
-* `scripts-common.sh` — file with a handful of useful functions, used both in `build` and `scripts`
-* `vm-deploy.yaml` — sample creation of a single VM, for testing autoscaling
 * `vm-examples/` — collection of VMs:
     * `pg16-disk-test/` — VM with Postgres 16 and and ssh access
       * Refer to [`vm-examples/pg16-disk-test/README.md`](./vm-examples/pg16-disk-test)  for more information.
 
-[cluster-autoscaler]: https://github.com/kubernetes/autoscaler/tree/master/cluster-autoscaler
-
 ## Agent-Scheduler protocol details
 
 Broadly speaking, the `autoscaler-agent` _notifies_ on decrease and _requests_ increases. This means
diff --git a/Makefile b/Makefile
index 16964db67..4400936a3 100644
--- a/Makefile
+++ b/Makefile
@@ -129,7 +129,7 @@ build: fmt vet bin/vm-builder ## Build all neonvm binaries.
 
 .PHONY: bin/vm-builder
 bin/vm-builder: ## Build vm-builder binary.
-	GOOS=linux CGO_ENABLED=0 go build -o bin/vm-builder -ldflags "-X main.Version=${GIT_INFO}" neonvm/tools/vm-builder/main.go
+	GOOS=linux CGO_ENABLED=0 go build -o bin/vm-builder -ldflags "-X main.Version=${GIT_INFO}" vm-builder/main.go
 
 .PHONY: run
 run: fmt vet ## Run a controller from your host.
@@ -155,15 +155,15 @@ docker-push: docker-build ## Push docker images to docker registry
 
 .PHONY: docker-build-controller
 docker-build-controller: ## Build docker image for NeonVM controller
-	docker build --build-arg VM_RUNNER_IMAGE=$(IMG_RUNNER) --build-arg BUILDTAGS=$(if $(PRESERVE_RUNNER_PODS),nodelete) -t $(IMG_CONTROLLER) -f neonvm/Dockerfile .
+	docker build --build-arg VM_RUNNER_IMAGE=$(IMG_RUNNER) --build-arg BUILDTAGS=$(if $(PRESERVE_RUNNER_PODS),nodelete) -t $(IMG_CONTROLLER) -f neonvm-controller/Dockerfile .
 
 .PHONY: docker-build-runner
 docker-build-runner: ## Build docker image for NeonVM runner
-	docker build -t $(IMG_RUNNER) -f neonvm/runner/Dockerfile .
+	docker build -t $(IMG_RUNNER) -f neonvm-runner/Dockerfile .
 
 .PHONY: docker-build-vxlan-controller
 docker-build-vxlan-controller: ## Build docker image for NeonVM vxlan controller
-	docker build -t $(IMG_VXLAN_CONTROLLER) -f neonvm/tools/vxlan/Dockerfile .
+	docker build -t $(IMG_VXLAN_CONTROLLER) -f neonvm-vxlan-controller/Dockerfile .
 
 .PHONY: docker-build-autoscaler-agent
 docker-build-autoscaler-agent: ## Build docker image for autoscaler-agent
@@ -171,7 +171,7 @@ docker-build-autoscaler-agent: ## Build docker image for autoscaler-agent
 		--tag $(IMG_AUTOSCALER_AGENT) \
 		--load \
 		--build-arg "GIT_INFO=$(GIT_INFO)" \
-		--file build/autoscaler-agent/Dockerfile \
+		--file autoscaler-agent/Dockerfile \
 		.
 
 .PHONY: docker-build-scheduler
@@ -180,7 +180,7 @@ docker-build-scheduler: ## Build docker image for (autoscaling) scheduler
 		--tag $(IMG_SCHEDULER) \
 		--load \
 		--build-arg "GIT_INFO=$(GIT_INFO)" \
-		--file build/autoscale-scheduler/Dockerfile \
+		--file autoscale-scheduler/Dockerfile \
 		.
 
 .PHONY: docker-build-examples
@@ -221,8 +221,8 @@ endif
 
 .PHONY: kernel
 kernel: ## Build linux kernel.
-	rm -f neonvm/hack/kernel/vmlinuz; \
-	linux_config=$$(ls neonvm/hack/kernel/linux-config-*) \
+	rm -f neonvm-kernel/vmlinuz; \
+	linux_config=$$(ls neonvm-kernel/linux-config-*) \
 	kernel_version=$${linux_config##*-} \
 	iidfile=$$(mktemp /tmp/iid-XXXXXX); \
 	trap "rm $$iidfile" EXIT; \
@@ -232,10 +232,10 @@ kernel: ## Build linux kernel.
 		--pull \
 		--load \
 		--iidfile $$iidfile \
-		--file neonvm/hack/kernel/Dockerfile.kernel-builder \
-		neonvm/hack/kernel; \
+		--file neonvm-kernel/Dockerfile.kernel-builder \
+		neonvm-kernel; \
 	id=$$(docker create $$(cat $$iidfile)); \
-	docker cp $$id:/vmlinuz neonvm/hack/kernel/vmlinuz; \
+	docker cp $$id:/vmlinuz neonvm-kernel/vmlinuz; \
 	docker rm -f $$id
 
 .PHONY: check-local-context
@@ -257,47 +257,51 @@ $(RENDERED):
 .PHONY: render-manifests
 render-manifests: $(RENDERED) kustomize
 	# Prepare:
-	cd neonvm/config/controller && $(KUSTOMIZE) edit set image controller=$(IMG_CONTROLLER) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
-	cd neonvm/config/vxlan-controller && $(KUSTOMIZE) edit set image vxlan-controller=$(IMG_VXLAN_CONTROLLER) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
-	cd neonvm/runner-image-loader/bases && $(KUSTOMIZE) edit set image runner=$(IMG_RUNNER) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
-	cd deploy/scheduler && $(KUSTOMIZE) edit set image autoscale-scheduler=$(IMG_SCHEDULER) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
-	cd deploy/agent && $(KUSTOMIZE) edit set image autoscaler-agent=$(IMG_AUTOSCALER_AGENT) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
+	cd neonvm-controller && $(KUSTOMIZE) edit set image controller=$(IMG_CONTROLLER) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
+	cd neonvm-vxlan-controller && $(KUSTOMIZE) edit set image vxlan-controller=$(IMG_VXLAN_CONTROLLER) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
+	cd neonvm-runner/image-loader/bases && $(KUSTOMIZE) edit set image runner=$(IMG_RUNNER) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
+	cd autoscale-scheduler && $(KUSTOMIZE) edit set image autoscale-scheduler=$(IMG_SCHEDULER) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
+	cd autoscaler-agent && $(KUSTOMIZE) edit set image autoscaler-agent=$(IMG_AUTOSCALER_AGENT) && $(KUSTOMIZE) edit add annotation buildtime:$(BUILDTS) --force
 	# Build:
 	$(KUSTOMIZE) build neonvm/config/whereabouts > $(RENDERED)/whereabouts.yaml
 	$(KUSTOMIZE) build neonvm/config/multus-eks > $(RENDERED)/multus-eks.yaml
 	$(KUSTOMIZE) build neonvm/config/multus > $(RENDERED)/multus.yaml
 	$(KUSTOMIZE) build neonvm/config > $(RENDERED)/neonvm.yaml
-	$(KUSTOMIZE) build neonvm/runner-image-loader > $(RENDERED)/neonvm-runner-image-loader.yaml
-	$(KUSTOMIZE) build deploy/scheduler > $(RENDERED)/autoscale-scheduler.yaml
-	$(KUSTOMIZE) build deploy/agent > $(RENDERED)/autoscaler-agent.yaml
+	$(KUSTOMIZE) build neonvm-controller > $(RENDERED)/neonvm-controller.yaml
+	$(KUSTOMIZE) build neonvm-vxlan-controller > $(RENDERED)/neonvm-vxlan-controller.yaml
+	$(KUSTOMIZE) build neonvm-runner/image-loader > $(RENDERED)/neonvm-runner-image-loader.yaml
+	$(KUSTOMIZE) build autoscale-scheduler > $(RENDERED)/autoscale-scheduler.yaml
+	$(KUSTOMIZE) build autoscaler-agent > $(RENDERED)/autoscaler-agent.yaml
 	# Cleanup:
-	cd neonvm/config/controller && $(KUSTOMIZE) edit set image controller=controller:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
-	cd neonvm/config/vxlan-controller && $(KUSTOMIZE) edit set image vxlan-controller=vxlan-controller:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
-	cd neonvm/runner-image-loader/bases && $(KUSTOMIZE) edit set image runner=runner:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
-	cd deploy/scheduler && $(KUSTOMIZE) edit set image autoscale-scheduler=autoscale-scheduler:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
-	cd deploy/agent && $(KUSTOMIZE) edit set image autoscaler-agent=autoscaler-agent:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
+	cd neonvm-controller && $(KUSTOMIZE) edit set image controller=controller:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
+	cd neonvm-vxlan-controller && $(KUSTOMIZE) edit set image vxlan-controller=vxlan-controller:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
+	cd neonvm-runner/image-loader/bases && $(KUSTOMIZE) edit set image runner=runner:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
+	cd autoscale-scheduler && $(KUSTOMIZE) edit set image autoscale-scheduler=autoscale-scheduler:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
+	cd autoscaler-agent && $(KUSTOMIZE) edit set image autoscaler-agent=autoscaler-agent:dev && $(KUSTOMIZE) edit remove annotation buildtime --ignore-non-existence
 
 render-release: $(RENDERED) kustomize
 	# Prepare:
-	cd neonvm/config/controller && $(KUSTOMIZE) edit set image controller=$(IMG_CONTROLLER)
-	cd neonvm/config/vxlan-controller && $(KUSTOMIZE) edit set image vxlan-controller=$(IMG_VXLAN_CONTROLLER)
-	cd neonvm/runner-image-loader/bases && $(KUSTOMIZE) edit set image runner=$(IMG_RUNNER)
-	cd deploy/scheduler && $(KUSTOMIZE) edit set image autoscale-scheduler=$(IMG_SCHEDULER)
-	cd deploy/agent && $(KUSTOMIZE) edit set image autoscaler-agent=$(IMG_AUTOSCALER_AGENT)
+	cd neonvm-controller && $(KUSTOMIZE) edit set image controller=$(IMG_CONTROLLER)
+	cd neonvm-vxlan-controller && $(KUSTOMIZE) edit set image vxlan-controller=$(IMG_VXLAN_CONTROLLER)
+	cd neonvm-runner/image-loader/bases && $(KUSTOMIZE) edit set image runner=$(IMG_RUNNER)
+	cd autoscale-scheduler && $(KUSTOMIZE) edit set image autoscale-scheduler=$(IMG_SCHEDULER)
+	cd autoscaler-agent && $(KUSTOMIZE) edit set image autoscaler-agent=$(IMG_AUTOSCALER_AGENT)
 	# Build:
 	$(KUSTOMIZE) build neonvm/config/whereabouts > $(RENDERED)/whereabouts.yaml
 	$(KUSTOMIZE) build neonvm/config/multus-eks > $(RENDERED)/multus-eks.yaml
 	$(KUSTOMIZE) build neonvm/config/multus > $(RENDERED)/multus.yaml
 	$(KUSTOMIZE) build neonvm/config > $(RENDERED)/neonvm.yaml
-	$(KUSTOMIZE) build neonvm/runner-image-loader > $(RENDERED)/neonvm-runner-image-loader.yaml
-	$(KUSTOMIZE) build deploy/scheduler > $(RENDERED)/autoscale-scheduler.yaml
-	$(KUSTOMIZE) build deploy/agent > $(RENDERED)/autoscaler-agent.yaml
+	$(KUSTOMIZE) build neonvm-controller > $(RENDERED)/neonvm-controller.yaml
+	$(KUSTOMIZE) build neonvm-vxlan-controller > $(RENDERED)/neonvm-vxlan-controller.yaml
+	$(KUSTOMIZE) build neonvm-runner/image-loader > $(RENDERED)/neonvm-runner-image-loader.yaml
+	$(KUSTOMIZE) build autoscale-scheduler > $(RENDERED)/autoscale-scheduler.yaml
+	$(KUSTOMIZE) build autoscaler-agent > $(RENDERED)/autoscaler-agent.yaml
 	# Cleanup:
-	cd neonvm/config/controller && $(KUSTOMIZE) edit set image controller=controller:dev
-	cd neonvm/config/vxlan-controller && $(KUSTOMIZE) edit set image vxlan-controller=vxlan-controller:dev
-	cd neonvm/runner-image-loader/bases && $(KUSTOMIZE) edit set image runner=runner:dev
-	cd deploy/scheduler && $(KUSTOMIZE) edit set image autoscale-scheduler=autoscale-scheduler:dev
-	cd deploy/agent && $(KUSTOMIZE) edit set image autoscaler-agent=autoscaler-agent:dev
+	cd neonvm-controller && $(KUSTOMIZE) edit set image controller=controller:dev
+	cd neonvm-vxlan-controller && $(KUSTOMIZE) edit set image vxlan-controller=vxlan-controller:dev
+	cd neonvm-runner/image-loader/bases && $(KUSTOMIZE) edit set image runner=runner:dev
+	cd autoscale-scheduler && $(KUSTOMIZE) edit set image autoscale-scheduler=autoscale-scheduler:dev
+	cd autoscaler-agent && $(KUSTOMIZE) edit set image autoscaler-agent=autoscaler-agent:dev
 
 .PHONY: deploy
 deploy: check-local-context docker-build load-images render-manifests kubectl ## Deploy controller to the K8s cluster specified in ~/.kube/config.
@@ -308,9 +312,11 @@ deploy: check-local-context docker-build load-images render-manifests kubectl ##
 	$(KUBECTL) apply -f $(RENDERED)/neonvm-runner-image-loader.yaml
 	$(KUBECTL) -n neonvm-system rollout status daemonset neonvm-runner-image-loader
 	$(KUBECTL) apply -f $(RENDERED)/neonvm.yaml
-	$(KUBECTL) -n neonvm-system rollout status daemonset  neonvm-device-plugin
-	$(KUBECTL) -n neonvm-system rollout status daemonset  neonvm-vxlan-controller
+	$(KUBECTL) -n neonvm-system rollout status daemonset neonvm-device-plugin
+	$(KUBECTL) apply -f $(RENDERED)/neonvm-controller.yaml
 	$(KUBECTL) -n neonvm-system rollout status deployment neonvm-controller
+	$(KUBECTL) apply -f $(RENDERED)/neonvm-vxlan-controller.yaml
+	$(KUBECTL) -n neonvm-system rollout status daemonset neonvm-vxlan-controller
 	# NB: typical upgrade path requires updated scheduler before autoscaler-agents.
 	$(KUBECTL) apply -f $(RENDERED)/autoscale-scheduler.yaml
 	$(KUBECTL) -n kube-system rollout status deployment autoscale-scheduler
diff --git a/neonvm/README.md b/README-NeonVM.md
similarity index 87%
rename from neonvm/README.md
rename to README-NeonVM.md
index fb2a79fcb..4e25c3889 100644
--- a/neonvm/README.md
+++ b/README-NeonVM.md
@@ -18,6 +18,8 @@ kubectl apply -f https://github.com/cert-manager/cert-manager/releases/latest/do
 kubectl apply -f https://github.com/neondatabase/autoscaling/releases/latest/download/multus.yaml
 kubectl apply -f https://github.com/neondatabase/autoscaling/releases/latest/download/whereabouts.yaml
 kubectl apply -f https://github.com/neondatabase/autoscaling/releases/latest/download/neonvm.yaml
+kubectl apply -f https://github.com/neondatabase/autoscaling/releases/latest/download/neonvm-vxlan-controller.yaml
+kubectl apply -f https://github.com/neondatabase/autoscaling/releases/latest/download/neonvm-controller.yaml
 ```
 
 ### Run virtual machine
@@ -111,16 +113,7 @@ make k3d-setup
 make kernel
 ```
 
-(Alternatively, pull & extract it from Dockerhub)
-
-To adjust the kernel config:
-
-```
-cd hack/kernel
-docker build --build-arg KERNEL_VERSION=6.1.92 --platform linux/x86_64 --target build-deps -t kernel-build-deps -f Dockerfile.kernel-builder .
-docker run --rm -v $PWD:/host --name kernel-build -it kernel-build-deps bash
-# inside that bash shell, do the menuconfig, then copy-out the config to /host
-```
+For more on the kernel, see [neonvm-kernel/](./neonvm-kernel/).
 
 #### 3. Build and deploy controller and VXLAN overlay network to local cluster
 
@@ -290,20 +283,3 @@ which provides a reconcile function responsible for synchronizing resources unti
 - [x] Simplify VM disk image creation from any docker image
 - [ ] ARM64 support
 
-
-## License
-
-Copyright 2022.
-
-Licensed under the Apache License, Version 2.0 (the "License");
-you may not use this file except in compliance with the License.
-You may obtain a copy of the License at
-
-    http://www.apache.org/licenses/LICENSE-2.0
-
-Unless required by applicable law or agreed to in writing, software
-distributed under the License is distributed on an "AS IS" BASIS,
-WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
-See the License for the specific language governing permissions and
-limitations under the License.
-
diff --git a/README.md b/README.md
index e6e4464af..c73cb6921 100644
--- a/README.md
+++ b/README.md
@@ -34,7 +34,7 @@ We've tried a bunch of existing tools and settled on the following:
 * Use [VM live migration](https://www.qemu.org/docs/master/devel/migration/index.html) to move running
   postgres instances between physical nodes
 * QEMU is used as our hypervisor
-* [NeonVM](https://github.com/neondatabase/autoscaling/tree/main/neonvm) orchestrates NeonVM VMs as custom resources in
+* [NeonVM](./README-NeonVM.md) orchestrates NeonVM VMs as custom resources in
   K8s, and is responsible for scaling allocated resources (CPU and memory)
 * A modified K8s scheduler ensures that we don't overcommit resources and triggers migrations when
   demand is above a pre-configured threshold
diff --git a/build/autoscale-scheduler/Dockerfile b/autoscale-scheduler/Dockerfile
similarity index 90%
rename from build/autoscale-scheduler/Dockerfile
rename to autoscale-scheduler/Dockerfile
index aa972d9b2..f707a3639 100644
--- a/build/autoscale-scheduler/Dockerfile
+++ b/autoscale-scheduler/Dockerfile
@@ -12,7 +12,7 @@ COPY neonvm/client           neonvm/client
 COPY pkg/api                 pkg/api
 COPY pkg/plugin              pkg/plugin
 COPY pkg/util                pkg/util
-COPY cmd/autoscale-scheduler cmd/autoscale-scheduler
+COPY autoscale-scheduler/cmd autoscale-scheduler/cmd
 
 ARG GIT_INFO
 
@@ -22,7 +22,7 @@ RUN --mount=type=cache,target=/root/.cache/go-build \
 	-mod readonly \
     # -ldflags "-X ..." allows us to overwrite the value of a variable in a package \
     -ldflags "-X 'github.com/neondatabase/autoscaling/pkg/util.BuildGitInfo=$GIT_INFO'" \
-    cmd/autoscale-scheduler/main.go
+    autoscale-scheduler/cmd/*.go
 
 FROM alpine
 COPY --from=builder /workspace/main /usr/bin/kube-scheduler
diff --git a/cmd/autoscale-scheduler/main.go b/autoscale-scheduler/cmd/main.go
similarity index 100%
rename from cmd/autoscale-scheduler/main.go
rename to autoscale-scheduler/cmd/main.go
diff --git a/deploy/scheduler/config_map.yaml b/autoscale-scheduler/config_map.yaml
similarity index 100%
rename from deploy/scheduler/config_map.yaml
rename to autoscale-scheduler/config_map.yaml
diff --git a/deploy/scheduler/deployment.yaml b/autoscale-scheduler/deployment.yaml
similarity index 100%
rename from deploy/scheduler/deployment.yaml
rename to autoscale-scheduler/deployment.yaml
diff --git a/deploy/scheduler/kustomization.yaml b/autoscale-scheduler/kustomization.yaml
similarity index 100%
rename from deploy/scheduler/kustomization.yaml
rename to autoscale-scheduler/kustomization.yaml
diff --git a/deploy/scheduler/role_binding.yaml b/autoscale-scheduler/role_binding.yaml
similarity index 100%
rename from deploy/scheduler/role_binding.yaml
rename to autoscale-scheduler/role_binding.yaml
diff --git a/deploy/scheduler/service_account.yaml b/autoscale-scheduler/service_account.yaml
similarity index 100%
rename from deploy/scheduler/service_account.yaml
rename to autoscale-scheduler/service_account.yaml
diff --git a/build/autoscaler-agent/Dockerfile b/autoscaler-agent/Dockerfile
similarity index 91%
rename from build/autoscaler-agent/Dockerfile
rename to autoscaler-agent/Dockerfile
index 1d95bbd8a..d869937b3 100644
--- a/build/autoscaler-agent/Dockerfile
+++ b/autoscaler-agent/Dockerfile
@@ -13,7 +13,7 @@ COPY pkg/agent            pkg/agent
 COPY pkg/api              pkg/api
 COPY pkg/billing          pkg/billing
 COPY pkg/util             pkg/util
-COPY cmd/autoscaler-agent cmd/autoscaler-agent
+COPY autoscaler-agent/cmd autoscaler-agent/cmd
 
 ARG GIT_INFO
 
@@ -23,7 +23,7 @@ RUN --mount=type=cache,target=/root/.cache/go-build \
 	-mod readonly \
     # -ldflags "-X ..." allows us to overwrite the value of a variable in a package \
     -ldflags "-X 'github.com/neondatabase/autoscaling/pkg/util.BuildGitInfo=$GIT_INFO'" \
-    cmd/autoscaler-agent/main.go
+    autoscaler-agent/cmd/*.go
 
 FROM alpine
 COPY --from=builder /workspace/main /usr/bin/autoscaler-agent
diff --git a/cmd/autoscaler-agent/main.go b/autoscaler-agent/cmd/main.go
similarity index 100%
rename from cmd/autoscaler-agent/main.go
rename to autoscaler-agent/cmd/main.go
diff --git a/deploy/agent/config_map.yaml b/autoscaler-agent/config_map.yaml
similarity index 100%
rename from deploy/agent/config_map.yaml
rename to autoscaler-agent/config_map.yaml
diff --git a/deploy/agent/daemonset.yaml b/autoscaler-agent/daemonset.yaml
similarity index 100%
rename from deploy/agent/daemonset.yaml
rename to autoscaler-agent/daemonset.yaml
diff --git a/deploy/agent/kustomization.yaml b/autoscaler-agent/kustomization.yaml
similarity index 100%
rename from deploy/agent/kustomization.yaml
rename to autoscaler-agent/kustomization.yaml
diff --git a/deploy/agent/role_binding.yaml b/autoscaler-agent/role_binding.yaml
similarity index 100%
rename from deploy/agent/role_binding.yaml
rename to autoscaler-agent/role_binding.yaml
diff --git a/deploy/agent/service_account.yaml b/autoscaler-agent/service_account.yaml
similarity index 100%
rename from deploy/agent/service_account.yaml
rename to autoscaler-agent/service_account.yaml
diff --git a/deploy/.gitignore b/deploy/.gitignore
deleted file mode 100644
index 74ca1a220..000000000
--- a/deploy/.gitignore
+++ /dev/null
@@ -1,4 +0,0 @@
-flannel.yaml
-cert-manager.yaml
-multus-daemonset.yaml
-neonvm.yaml
diff --git a/neonvm/Dockerfile b/neonvm-controller/Dockerfile
similarity index 77%
rename from neonvm/Dockerfile
rename to neonvm-controller/Dockerfile
index 550759269..dd86c567f 100644
--- a/neonvm/Dockerfile
+++ b/neonvm-controller/Dockerfile
@@ -13,21 +13,19 @@ COPY go.sum go.sum
 RUN go mod download
 
 # Copy the go source
-COPY pkg/util            pkg/util
-COPY neonvm/main.go      neonvm/main.go
-COPY neonvm/apis/        neonvm/apis/
-COPY neonvm/controllers/ neonvm/controllers/
-COPY neonvm/pkg/         neonvm/pkg/
-COPY neonvm/client/      neonvm/client/
-COPY pkg/api/ pkg/api
-COPY pkg/util pkg/util
+COPY pkg/api/              pkg/api
+COPY pkg/util              pkg/util
+COPY pkg/neonvm/           pkg/neonvm
+COPY neonvm/apis           neonvm/apis
+COPY neonvm/client         neonvm/client
+COPY neonvm-controller/cmd neonvm-controller/cmd
 
 # Build
 # the GOARCH has not a default value to allow the binary be built according to the host where the command
 # was called. For example, if we call make docker-build in a local env which has the Apple Silicon M1 SO
 # the docker BUILDPLATFORM arg will be linux/arm64 when for Apple x86 it will be linux/amd64. Therefore,
 # by leaving it empty we can ensure that the container and binary shipped on it will have the same platform.
-RUN CGO_ENABLED=0 GOOS=${TARGETOS:-linux} GOARCH=${TARGETARCH} go build -a -tags=${BUILDTAGS} -o manager neonvm/main.go
+RUN CGO_ENABLED=0 GOOS=${TARGETOS:-linux} GOARCH=${TARGETARCH} go build -a -tags=${BUILDTAGS} -o manager neonvm-controller/cmd/*.go
 
 # Use distroless as minimal base image to package the manager binary
 # Refer to https://github.com/GoogleContainerTools/distroless for more details
diff --git a/neonvm/main.go b/neonvm-controller/cmd/main.go
similarity index 99%
rename from neonvm/main.go
rename to neonvm-controller/cmd/main.go
index b153f25a9..c12927aca 100644
--- a/neonvm/main.go
+++ b/neonvm-controller/cmd/main.go
@@ -51,7 +51,7 @@ import (
 	"k8s.io/klog/v2"
 
 	vmv1 "github.com/neondatabase/autoscaling/neonvm/apis/neonvm/v1"
-	"github.com/neondatabase/autoscaling/neonvm/controllers"
+	"github.com/neondatabase/autoscaling/pkg/neonvm/controllers"
 	"github.com/neondatabase/autoscaling/pkg/util"
 )
 
diff --git a/neonvm/config/controller/deployment.yaml b/neonvm-controller/deployment.yaml
similarity index 100%
rename from neonvm/config/controller/deployment.yaml
rename to neonvm-controller/deployment.yaml
diff --git a/neonvm-controller/kustomization.yaml b/neonvm-controller/kustomization.yaml
new file mode 100644
index 000000000..b94e2c1e5
--- /dev/null
+++ b/neonvm-controller/kustomization.yaml
@@ -0,0 +1,66 @@
+apiVersion: kustomize.config.k8s.io/v1beta1
+kind: Kustomization
+
+# Add neonvm-system namespace to all resources
+namespace: neonvm-system
+# Prepend 'neonvm-' to all resource names.
+namePrefix: neonvm-
+
+# double-include overlay networks so we can reference them correctly
+resources:
+- deployment.yaml
+- service_account.yaml
+- role.yaml
+- role_binding.yaml
+- leader_election_role.yaml
+- leader_election_role_binding.yaml
+- ../neonvm/config/network
+- ../neonvm-runner/image-loader/bases
+
+images:
+- name: controller
+  newName: controller
+  newTag: dev
+
+# overlay networking variables
+vars:
+- fieldref:
+    fieldPath: spec.template.spec.containers.[name=neonvm-runner-loader].image
+  name: VM_RUNNER_IMAGE
+  objref:
+    group: apps
+    kind: DaemonSet
+    name: runner-image-loader
+    version: v1
+- fieldref:
+    fieldPath: metadata.name
+  name: NAD_IPAM_NAME
+  objref:
+    group: k8s.cni.cncf.io
+    kind: NetworkAttachmentDefinition
+    name: overlay-ipam
+    version: v1
+- fieldref:
+    fieldPath: metadata.namespace
+  name: NAD_IPAM_NAMESPACE
+  objref:
+    group: k8s.cni.cncf.io
+    kind: NetworkAttachmentDefinition
+    name: overlay-ipam
+    version: v1
+- fieldref:
+    fieldPath: metadata.name
+  name: NAD_RUNNER_NAME
+  objref:
+    group: k8s.cni.cncf.io
+    kind: NetworkAttachmentDefinition
+    name: overlay-for-vms
+    version: v1
+- fieldref:
+    fieldPath: metadata.namespace
+  name: NAD_RUNNER_NAMESPACE
+  objref:
+    group: k8s.cni.cncf.io
+    kind: NetworkAttachmentDefinition
+    name: overlay-for-vms
+    version: v1
diff --git a/neonvm/config/rbac/leader_election_role.yaml b/neonvm-controller/leader_election_role.yaml
similarity index 100%
rename from neonvm/config/rbac/leader_election_role.yaml
rename to neonvm-controller/leader_election_role.yaml
diff --git a/neonvm/config/rbac/leader_election_role_binding.yaml b/neonvm-controller/leader_election_role_binding.yaml
similarity index 100%
rename from neonvm/config/rbac/leader_election_role_binding.yaml
rename to neonvm-controller/leader_election_role_binding.yaml
diff --git a/neonvm/config/rbac/role.yaml b/neonvm-controller/role.yaml
similarity index 100%
rename from neonvm/config/rbac/role.yaml
rename to neonvm-controller/role.yaml
diff --git a/neonvm/config/rbac/role_binding.yaml b/neonvm-controller/role_binding.yaml
similarity index 100%
rename from neonvm/config/rbac/role_binding.yaml
rename to neonvm-controller/role_binding.yaml
diff --git a/neonvm/config/rbac/service_account.yaml b/neonvm-controller/service_account.yaml
similarity index 100%
rename from neonvm/config/rbac/service_account.yaml
rename to neonvm-controller/service_account.yaml
diff --git a/neonvm-kernel/.gitignore b/neonvm-kernel/.gitignore
new file mode 100644
index 000000000..00023b26b
--- /dev/null
+++ b/neonvm-kernel/.gitignore
@@ -0,0 +1 @@
+vmlinuz
diff --git a/neonvm/hack/kernel/Dockerfile.kernel-builder b/neonvm-kernel/Dockerfile.kernel-builder
similarity index 100%
rename from neonvm/hack/kernel/Dockerfile.kernel-builder
rename to neonvm-kernel/Dockerfile.kernel-builder
diff --git a/neonvm-kernel/README.md b/neonvm-kernel/README.md
new file mode 100644
index 000000000..533ad24d4
--- /dev/null
+++ b/neonvm-kernel/README.md
@@ -0,0 +1,54 @@
+# NeonVM kernel
+
+We build a custom kernel in order to:
+
+1. Have support for unusual features that are only required for VMs (e.g. hotplugging, kvm-ptp clock
+   synchronization, etc.)
+2. Avoid including features we don't need
+
+Kernel images are all at `neondatabase/vm-kernel:$tag`, built by the
+[vm-kernel](../.github/workflows/vm-kernel.yaml) github workflow.
+
+Kernel images are typically assigned to a VM based on what was bundled in with the `neonvm-runner`
+in use, although this can be overridden on an individual VM basis using the
+`.spec.guest.kernelImage` field.
+
+## Upgrading the kernel
+
+Assuming a plain upgrade (i.e. no additional features to enable), upgrading the kernel can be done
+with the following sequence of actions:
+
+1. On the host, run:
+   ```sh
+   cd neonvm-kernel # this directory
+   docker build --build-arg KERNEL_VERSION=$NEW_VERSION --platform linux/x86_64 --target build-deps -t kernel-build-deps -f Dockerfile.kernel-builder .
+   docker run --rm -v $PWD:/host --name kernel-build -it kernel-build-deps bash
+   ```
+2. Then, inside the container, run:
+   ```sh
+   cd linux-$NEW_VERSION
+   cp /host/linux-config-6.1.92 .config # Copy current config in
+   make menuconfig
+   # do nothing; just save and exit, overwriting .config
+   cp .config /host/linux-config-$NEW_VERSION # NOTE: Different from existing!
+   ```
+3. Back on the host, finish with:
+   ```sh
+   # compare the two versions
+   diff linux-config-6.1.92 linux-config-$NEW_VERSION
+   # If all looks good, delete the old version. This is required so auto-selection works.
+   rm linux-config-6.1.92
+   ```
+
+Afterwards, it's probably also good to do a search-and-replace repo-wide to update all places that
+mention the old kernel version.
+
+## Adjusting the config
+
+To adjust the kernel config, try the following from this directory:
+
+```sh
+docker build --build-arg KERNEL_VERSION=6.1.92 --platform linux/x86_64 --target build-deps -t kernel-build-deps -f Dockerfile.kernel-builder .
+docker run --rm -v $PWD:/host --name kernel-build -it kernel-build-deps bash
+# inside that bash shell, do the menuconfig, then copy-out the config to /host
+```
diff --git a/neonvm/hack/kernel/linux-config-6.1.92 b/neonvm-kernel/linux-config-6.1.92
similarity index 100%
rename from neonvm/hack/kernel/linux-config-6.1.92
rename to neonvm-kernel/linux-config-6.1.92
diff --git a/neonvm/runner/Dockerfile b/neonvm-runner/Dockerfile
similarity index 77%
rename from neonvm/runner/Dockerfile
rename to neonvm-runner/Dockerfile
index 75faaa9a2..27effec66 100644
--- a/neonvm/runner/Dockerfile
+++ b/neonvm-runner/Dockerfile
@@ -12,20 +12,18 @@ COPY go.sum go.sum
 RUN go mod download
 
 # Copy the go source
-COPY neonvm/main.go      neonvm/main.go
-COPY neonvm/apis/        neonvm/apis/
-COPY neonvm/controllers/ neonvm/controllers/
-COPY neonvm/runner/      neonvm/runner/
-COPY pkg/api/ pkg/api
-COPY pkg/util pkg/util
+COPY neonvm/apis       neonvm/apis
+COPY pkg/api           pkg/api
+COPY pkg/util          pkg/util
+COPY neonvm-runner/cmd neonvm-runner/cmd
 
 # Build
 # the GOARCH has not a default value to allow the binary be built according to the host where the command
 # was called. For example, if we call make docker-build in a local env which has the Apple Silicon M1 SO
 # the docker BUILDPLATFORM arg will be linux/arm64 when for Apple x86 it will be linux/amd64. Therefore,
 # by leaving it empty we can ensure that the container and binary shipped on it will have the same platform.
-RUN CGO_ENABLED=0 GOOS=${TARGETOS:-linux} GOARCH=${TARGETARCH} go build -a -o /runner neonvm/runner/main.go
-RUN CGO_ENABLED=0 GOOS=${TARGETOS:-linux} GOARCH=${TARGETARCH} go build -a -o /container-mgr neonvm/runner/container-mgr/*.go
+RUN CGO_ENABLED=0 GOOS=${TARGETOS:-linux} GOARCH=${TARGETARCH} go build -a -o /runner        neonvm-runner/cmd/*.go
+RUN CGO_ENABLED=0 GOOS=${TARGETOS:-linux} GOARCH=${TARGETARCH} go build -a -o /container-mgr neonvm-runner/cmd/container-mgr/*.go
 
 FROM alpine:3.18 AS crictl
 
@@ -57,10 +55,10 @@ RUN apk add --no-cache \
 	cgroup-tools \
     openssh
 
-COPY --from=builder /runner /usr/bin/runner
+COPY --from=builder /runner        /usr/bin/runner
 COPY --from=builder /container-mgr /usr/bin/container-mgr
-COPY --from=crictl /crictl /usr/bin/crictl
-COPY neonvm/hack/kernel/vmlinuz /vm/kernel/vmlinuz
-COPY neonvm/runner/ssh_config /etc/ssh/ssh_config
+COPY --from=crictl  /crictl        /usr/bin/crictl
+COPY neonvm-kernel/vmlinuz    /vm/kernel/vmlinuz
+COPY neonvm-runner/ssh_config /etc/ssh/ssh_config
 
 ENTRYPOINT ["/sbin/tini", "--", "runner"]
diff --git a/neonvm/runner/container-mgr/crictl.go b/neonvm-runner/cmd/container-mgr/crictl.go
similarity index 100%
rename from neonvm/runner/container-mgr/crictl.go
rename to neonvm-runner/cmd/container-mgr/crictl.go
diff --git a/neonvm/runner/container-mgr/main.go b/neonvm-runner/cmd/container-mgr/main.go
similarity index 100%
rename from neonvm/runner/container-mgr/main.go
rename to neonvm-runner/cmd/container-mgr/main.go
diff --git a/neonvm/runner/main.go b/neonvm-runner/cmd/main.go
similarity index 100%
rename from neonvm/runner/main.go
rename to neonvm-runner/cmd/main.go
diff --git a/neonvm/runner-image-loader/bases/daemonset.yaml b/neonvm-runner/image-loader/bases/daemonset.yaml
similarity index 100%
rename from neonvm/runner-image-loader/bases/daemonset.yaml
rename to neonvm-runner/image-loader/bases/daemonset.yaml
diff --git a/neonvm/runner-image-loader/bases/kustomization.yaml b/neonvm-runner/image-loader/bases/kustomization.yaml
similarity index 100%
rename from neonvm/runner-image-loader/bases/kustomization.yaml
rename to neonvm-runner/image-loader/bases/kustomization.yaml
diff --git a/neonvm/runner-image-loader/kustomization.yaml b/neonvm-runner/image-loader/kustomization.yaml
similarity index 89%
rename from neonvm/runner-image-loader/kustomization.yaml
rename to neonvm-runner/image-loader/kustomization.yaml
index c2a84289c..ad422a9af 100644
--- a/neonvm/runner-image-loader/kustomization.yaml
+++ b/neonvm-runner/image-loader/kustomization.yaml
@@ -8,7 +8,8 @@ namePrefix: neonvm-
 
 resources:
 - bases
-- ../config/namespace
+- ../../neonvm/config/namespace
+
 images:
 - name: runner
   newName: runner
diff --git a/neonvm/runner/ssh_config b/neonvm-runner/ssh_config
similarity index 100%
rename from neonvm/runner/ssh_config
rename to neonvm-runner/ssh_config
diff --git a/neonvm/tools/vxlan/Dockerfile b/neonvm-vxlan-controller/Dockerfile
similarity index 91%
rename from neonvm/tools/vxlan/Dockerfile
rename to neonvm-vxlan-controller/Dockerfile
index c7f4521d2..ab3d37c26 100644
--- a/neonvm/tools/vxlan/Dockerfile
+++ b/neonvm-vxlan-controller/Dockerfile
@@ -12,14 +12,14 @@ COPY go.sum go.sum
 RUN go mod download
 
 # Copy the go source
-COPY neonvm/tools/vxlan/controller/ neonvm/tools/vxlan/controller/
+COPY neonvm-vxlan-controller/cmd neonvm-vxlan-controller/cmd
 
 # Build
 # the GOARCH has not a default value to allow the binary be built according to the host where the command
 # was called. For example, if we call make docker-build in a local env which has the Apple Silicon M1 SO
 # the docker BUILDPLATFORM arg will be linux/arm64 when for Apple x86 it will be linux/amd64. Therefore,
 # by leaving it empty we can ensure that the container and binary shipped on it will have the same platform.
-RUN CGO_ENABLED=0 GOOS=${TARGETOS:-linux} GOARCH=${TARGETARCH} go build -a -o /vxlan-controller neonvm/tools/vxlan/controller/main.go
+RUN CGO_ENABLED=0 GOOS=${TARGETOS:-linux} GOARCH=${TARGETARCH} go build -a -o /vxlan-controller neonvm-vxlan-controller/cmd/*.go
 
 FROM alpine:3.18
 
diff --git a/neonvm/tools/vxlan/controller/main.go b/neonvm-vxlan-controller/cmd/main.go
similarity index 100%
rename from neonvm/tools/vxlan/controller/main.go
rename to neonvm-vxlan-controller/cmd/main.go
diff --git a/neonvm/config/vxlan-controller/daemonset.yaml b/neonvm-vxlan-controller/daemonset.yaml
similarity index 100%
rename from neonvm/config/vxlan-controller/daemonset.yaml
rename to neonvm-vxlan-controller/daemonset.yaml
diff --git a/neonvm/config/vxlan-controller/kustomization.yaml b/neonvm-vxlan-controller/kustomization.yaml
similarity index 57%
rename from neonvm/config/vxlan-controller/kustomization.yaml
rename to neonvm-vxlan-controller/kustomization.yaml
index f07243cb8..3397cfac6 100644
--- a/neonvm/config/vxlan-controller/kustomization.yaml
+++ b/neonvm-vxlan-controller/kustomization.yaml
@@ -1,6 +1,11 @@
 apiVersion: kustomize.config.k8s.io/v1beta1
 kind: Kustomization
 
+# Add neonvm-system namespace to all resources
+namespace: neonvm-system
+# Prepend 'neonvm-' to all resource names.
+namePrefix: neonvm-
+
 resources:
 - daemonset.yaml
 - rbac.yaml
diff --git a/neonvm/config/vxlan-controller/rbac.yaml b/neonvm-vxlan-controller/rbac.yaml
similarity index 100%
rename from neonvm/config/vxlan-controller/rbac.yaml
rename to neonvm-vxlan-controller/rbac.yaml
diff --git a/neonvm/config/controller/kustomization.yaml b/neonvm/config/controller/kustomization.yaml
deleted file mode 100644
index eb633f0a1..000000000
--- a/neonvm/config/controller/kustomization.yaml
+++ /dev/null
@@ -1,9 +0,0 @@
-apiVersion: kustomize.config.k8s.io/v1beta1
-kind: Kustomization
-
-resources:
-- deployment.yaml
-images:
-- name: controller
-  newName: controller
-  newTag: dev
diff --git a/neonvm/config/kustomization.yaml b/neonvm/config/kustomization.yaml
index c549b2815..82191926a 100644
--- a/neonvm/config/kustomization.yaml
+++ b/neonvm/config/kustomization.yaml
@@ -16,29 +16,18 @@ bases:
 - namespace
 - crd
 - rbac
-- controller
 - webhook
 - certmanager
 # [PROMETHEUS] To enable prometheus monitor, uncomment all sections with 'PROMETHEUS'.
 #- ../common/prometheus
-- vxlan-controller
 - network
 - device-plugin
-- ../runner-image-loader/bases
 
 patchesStrategicMerge:
 - webhookcainjection_patch.yaml
 
 # the following config is for teaching kustomize how to do var substitution
 vars:
-- name: VM_RUNNER_IMAGE # full name of the neonvm-runner image
-  objref:
-    kind: DaemonSet
-    name: runner-image-loader
-    group: apps
-    version: v1
-  fieldref:
-    fieldpath: spec.template.spec.containers.[name=neonvm-runner-loader].image
 - name: CERTIFICATE_NAMESPACE # namespace of the certificate CR
   objref:
     kind: Certificate
@@ -65,36 +54,3 @@ vars:
     kind: Service
     version: v1
     name: webhook-service
-# overlay networking variables
-- name: NAD_IPAM_NAME
-  objref:
-    kind: NetworkAttachmentDefinition
-    group: k8s.cni.cncf.io
-    version: v1
-    name: overlay-ipam # this name should match the one in overlay-ipam.yaml
-  fieldref:
-    fieldpath: metadata.name
-- name: NAD_IPAM_NAMESPACE
-  objref:
-    kind: NetworkAttachmentDefinition
-    group: k8s.cni.cncf.io
-    version: v1
-    name: overlay-ipam # this name should match the one in overlay-ipam.yaml
-  fieldref:
-    fieldpath: metadata.namespace
-- name: NAD_RUNNER_NAME
-  objref:
-    kind: NetworkAttachmentDefinition
-    group: k8s.cni.cncf.io
-    version: v1
-    name: overlay-for-vms # this name should match the one in overlay-for-vms.yaml
-  fieldref:
-    fieldpath: metadata.name
-- name: NAD_RUNNER_NAMESPACE
-  objref:
-    kind: NetworkAttachmentDefinition
-    group: k8s.cni.cncf.io
-    version: v1
-    name: overlay-for-vms # this name should match the one in overlay-for-vms.yaml
-  fieldref:
-    fieldpath: metadata.namespace
diff --git a/neonvm/config/rbac/kustomization.yaml b/neonvm/config/rbac/kustomization.yaml
index 371aaa137..8a95ef863 100644
--- a/neonvm/config/rbac/kustomization.yaml
+++ b/neonvm/config/rbac/kustomization.yaml
@@ -4,11 +4,6 @@ resources:
 # if your manager will use a service account that exists at
 # runtime. Be sure to update RoleBinding and ClusterRoleBinding
 # subjects if changing service account names.
-- service_account.yaml
-- role.yaml
-- role_binding.yaml
-- leader_election_role.yaml
-- leader_election_role_binding.yaml
 - virtualmachine_viewer_role.yaml
 - virtualmachine_editor_role.yaml
 - virtualmachinemigration_viewer_role.yaml
diff --git a/neonvm/controllers/buildtag/nodelete_false.go b/pkg/neonvm/controllers/buildtag/nodelete_false.go
similarity index 100%
rename from neonvm/controllers/buildtag/nodelete_false.go
rename to pkg/neonvm/controllers/buildtag/nodelete_false.go
diff --git a/neonvm/controllers/buildtag/nodelete_true.go b/pkg/neonvm/controllers/buildtag/nodelete_true.go
similarity index 100%
rename from neonvm/controllers/buildtag/nodelete_true.go
rename to pkg/neonvm/controllers/buildtag/nodelete_true.go
diff --git a/neonvm/controllers/buildtag/tagnames.go b/pkg/neonvm/controllers/buildtag/tagnames.go
similarity index 100%
rename from neonvm/controllers/buildtag/tagnames.go
rename to pkg/neonvm/controllers/buildtag/tagnames.go
diff --git a/neonvm/controllers/catch_panic.go b/pkg/neonvm/controllers/catch_panic.go
similarity index 100%
rename from neonvm/controllers/catch_panic.go
rename to pkg/neonvm/controllers/catch_panic.go
diff --git a/neonvm/controllers/config.go b/pkg/neonvm/controllers/config.go
similarity index 100%
rename from neonvm/controllers/config.go
rename to pkg/neonvm/controllers/config.go
diff --git a/neonvm/controllers/failurelag/tracker.go b/pkg/neonvm/controllers/failurelag/tracker.go
similarity index 100%
rename from neonvm/controllers/failurelag/tracker.go
rename to pkg/neonvm/controllers/failurelag/tracker.go
diff --git a/neonvm/controllers/failurelag/tracker_test.go b/pkg/neonvm/controllers/failurelag/tracker_test.go
similarity index 97%
rename from neonvm/controllers/failurelag/tracker_test.go
rename to pkg/neonvm/controllers/failurelag/tracker_test.go
index f191f53f9..8c44f400a 100644
--- a/neonvm/controllers/failurelag/tracker_test.go
+++ b/pkg/neonvm/controllers/failurelag/tracker_test.go
@@ -6,7 +6,7 @@ import (
 
 	"github.com/stretchr/testify/assert"
 
-	"github.com/neondatabase/autoscaling/neonvm/controllers/failurelag"
+	"github.com/neondatabase/autoscaling/pkg/neonvm/controllers/failurelag"
 )
 
 type nowMock struct {
diff --git a/neonvm/controllers/functests/suite_test.go b/pkg/neonvm/controllers/functests/suite_test.go
similarity index 94%
rename from neonvm/controllers/functests/suite_test.go
rename to pkg/neonvm/controllers/functests/suite_test.go
index 2c52d2ce5..a8d339996 100644
--- a/neonvm/controllers/functests/suite_test.go
+++ b/pkg/neonvm/controllers/functests/suite_test.go
@@ -51,7 +51,7 @@ var _ = BeforeSuite(func() {
 
 	By("bootstrapping test environment")
 	testEnv = &envtest.Environment{
-		CRDDirectoryPaths:     []string{filepath.Join("..", "..", "config", "crd", "bases")},
+		CRDDirectoryPaths:     []string{filepath.Join("..", "..", "..", "..", "neonvm", "config", "crd", "bases")},
 		ErrorIfCRDPathMissing: true,
 	}
 
diff --git a/neonvm/controllers/functests/vm_controller_test.go b/pkg/neonvm/controllers/functests/vm_controller_test.go
similarity index 98%
rename from neonvm/controllers/functests/vm_controller_test.go
rename to pkg/neonvm/controllers/functests/vm_controller_test.go
index 9a3d4515e..6f19055c4 100644
--- a/neonvm/controllers/functests/vm_controller_test.go
+++ b/pkg/neonvm/controllers/functests/vm_controller_test.go
@@ -31,7 +31,7 @@ import (
 	"k8s.io/apimachinery/pkg/types"
 
 	vmv1 "github.com/neondatabase/autoscaling/neonvm/apis/neonvm/v1"
-	"github.com/neondatabase/autoscaling/neonvm/controllers"
+	"github.com/neondatabase/autoscaling/pkg/neonvm/controllers"
 )
 
 var _ = Describe("VirtualMachine controller", func() {
diff --git a/neonvm/controllers/metrics.go b/pkg/neonvm/controllers/metrics.go
similarity index 99%
rename from neonvm/controllers/metrics.go
rename to pkg/neonvm/controllers/metrics.go
index b8791baf6..9ec978c59 100644
--- a/neonvm/controllers/metrics.go
+++ b/pkg/neonvm/controllers/metrics.go
@@ -15,7 +15,7 @@ import (
 
 	"k8s.io/apimachinery/pkg/api/errors"
 
-	"github.com/neondatabase/autoscaling/neonvm/controllers/failurelag"
+	"github.com/neondatabase/autoscaling/pkg/neonvm/controllers/failurelag"
 	"github.com/neondatabase/autoscaling/pkg/util"
 )
 
diff --git a/neonvm/controllers/vm_controller.go b/pkg/neonvm/controllers/vm_controller.go
similarity index 99%
rename from neonvm/controllers/vm_controller.go
rename to pkg/neonvm/controllers/vm_controller.go
index fdb62863d..af8f5cccc 100644
--- a/neonvm/controllers/vm_controller.go
+++ b/pkg/neonvm/controllers/vm_controller.go
@@ -53,9 +53,9 @@ import (
 	"k8s.io/client-go/tools/record"
 
 	vmv1 "github.com/neondatabase/autoscaling/neonvm/apis/neonvm/v1"
-	"github.com/neondatabase/autoscaling/neonvm/controllers/buildtag"
-	"github.com/neondatabase/autoscaling/neonvm/pkg/ipam"
 	"github.com/neondatabase/autoscaling/pkg/api"
+	"github.com/neondatabase/autoscaling/pkg/neonvm/controllers/buildtag"
+	"github.com/neondatabase/autoscaling/pkg/neonvm/ipam"
 	"github.com/neondatabase/autoscaling/pkg/util/patch"
 )
 
diff --git a/neonvm/controllers/vm_controller_unit_test.go b/pkg/neonvm/controllers/vm_controller_unit_test.go
similarity index 100%
rename from neonvm/controllers/vm_controller_unit_test.go
rename to pkg/neonvm/controllers/vm_controller_unit_test.go
diff --git a/neonvm/controllers/vm_qmp_queries.go b/pkg/neonvm/controllers/vm_qmp_queries.go
similarity index 100%
rename from neonvm/controllers/vm_qmp_queries.go
rename to pkg/neonvm/controllers/vm_qmp_queries.go
diff --git a/neonvm/controllers/vm_qmp_test.go b/pkg/neonvm/controllers/vm_qmp_test.go
similarity index 94%
rename from neonvm/controllers/vm_qmp_test.go
rename to pkg/neonvm/controllers/vm_qmp_test.go
index 2be4ae2a8..d70bc5ea5 100644
--- a/neonvm/controllers/vm_qmp_test.go
+++ b/pkg/neonvm/controllers/vm_qmp_test.go
@@ -4,7 +4,7 @@ import (
 	. "github.com/onsi/ginkgo/v2"
 	. "github.com/onsi/gomega"
 
-	"github.com/neondatabase/autoscaling/neonvm/controllers"
+	"github.com/neondatabase/autoscaling/pkg/neonvm/controllers"
 )
 
 type qmpEvent struct {
diff --git a/neonvm/controllers/vmmigration_controller.go b/pkg/neonvm/controllers/vmmigration_controller.go
similarity index 99%
rename from neonvm/controllers/vmmigration_controller.go
rename to pkg/neonvm/controllers/vmmigration_controller.go
index ca9367f9a..83205336f 100644
--- a/neonvm/controllers/vmmigration_controller.go
+++ b/pkg/neonvm/controllers/vmmigration_controller.go
@@ -39,7 +39,7 @@ import (
 	"k8s.io/client-go/tools/record"
 
 	vmv1 "github.com/neondatabase/autoscaling/neonvm/apis/neonvm/v1"
-	"github.com/neondatabase/autoscaling/neonvm/controllers/buildtag"
+	"github.com/neondatabase/autoscaling/pkg/neonvm/controllers/buildtag"
 )
 
 const virtualmachinemigrationFinalizer = "vm.neon.tech/finalizer"
diff --git a/neonvm/controllers/webhook.go b/pkg/neonvm/controllers/webhook.go
similarity index 100%
rename from neonvm/controllers/webhook.go
rename to pkg/neonvm/controllers/webhook.go
diff --git a/neonvm/pkg/README.md b/pkg/neonvm/ipam/README.md
similarity index 66%
rename from neonvm/pkg/README.md
rename to pkg/neonvm/ipam/README.md
index 25ea1c832..4abd2d3a5 100644
--- a/neonvm/pkg/README.md
+++ b/pkg/neonvm/ipam/README.md
@@ -3,17 +3,17 @@
 ### Creat Network Attachment Definition
 
 ```console
-kubectl apply -f ipam-demo-nad.yaml
+kubectl apply -f demo/ipam-nad.yaml
 ```
 
 ### Run example
 
 ```console
-go run ipam-demo.go
+go run demo/ipam.go
 ```
 
 ### Delete Network Attachment Definition
 
 ```console
-kubectl delete -f ipam-demo-nad.yaml
+kubectl delete -f ipam-nad.yaml
 ```
diff --git a/neonvm/pkg/ipam/allocate.go b/pkg/neonvm/ipam/allocate.go
similarity index 100%
rename from neonvm/pkg/ipam/allocate.go
rename to pkg/neonvm/ipam/allocate.go
diff --git a/neonvm/pkg/ipam/client.go b/pkg/neonvm/ipam/client.go
similarity index 100%
rename from neonvm/pkg/ipam/client.go
rename to pkg/neonvm/ipam/client.go
diff --git a/neonvm/pkg/ipam-demo-nad.yaml b/pkg/neonvm/ipam/demo/ipam-nad.yaml
similarity index 100%
rename from neonvm/pkg/ipam-demo-nad.yaml
rename to pkg/neonvm/ipam/demo/ipam-nad.yaml
diff --git a/neonvm/pkg/ipam-demo.go b/pkg/neonvm/ipam/demo/ipam.go
similarity index 97%
rename from neonvm/pkg/ipam-demo.go
rename to pkg/neonvm/ipam/demo/ipam.go
index a486768e2..bbb8677f2 100644
--- a/neonvm/pkg/ipam-demo.go
+++ b/pkg/neonvm/ipam/demo/ipam.go
@@ -14,7 +14,7 @@ import (
 
 	"k8s.io/klog/v2"
 
-	"github.com/neondatabase/autoscaling/neonvm/pkg/ipam"
+	"github.com/neondatabase/autoscaling/pkg/neonvm/ipam"
 )
 
 var (
diff --git a/neonvm/pkg/ipam/ipam.go b/pkg/neonvm/ipam/ipam.go
similarity index 100%
rename from neonvm/pkg/ipam/ipam.go
rename to pkg/neonvm/ipam/ipam.go
diff --git a/neonvm/pkg/ipam/types.go b/pkg/neonvm/ipam/types.go
similarity index 100%
rename from neonvm/pkg/ipam/types.go
rename to pkg/neonvm/ipam/types.go
diff --git a/neonvm/tools/vm-builder/files/Dockerfile.img b/vm-builder/files/Dockerfile.img
similarity index 100%
rename from neonvm/tools/vm-builder/files/Dockerfile.img
rename to vm-builder/files/Dockerfile.img
diff --git a/neonvm/tools/vm-builder/files/chrony.conf b/vm-builder/files/chrony.conf
similarity index 100%
rename from neonvm/tools/vm-builder/files/chrony.conf
rename to vm-builder/files/chrony.conf
diff --git a/neonvm/tools/vm-builder/files/helper.move-bins.sh b/vm-builder/files/helper.move-bins.sh
similarity index 100%
rename from neonvm/tools/vm-builder/files/helper.move-bins.sh
rename to vm-builder/files/helper.move-bins.sh
diff --git a/neonvm/tools/vm-builder/files/inittab b/vm-builder/files/inittab
similarity index 100%
rename from neonvm/tools/vm-builder/files/inittab
rename to vm-builder/files/inittab
diff --git a/neonvm/tools/vm-builder/files/resize-swap.sh b/vm-builder/files/resize-swap.sh
similarity index 100%
rename from neonvm/tools/vm-builder/files/resize-swap.sh
rename to vm-builder/files/resize-swap.sh
diff --git a/neonvm/tools/vm-builder/files/sshd_config b/vm-builder/files/sshd_config
similarity index 100%
rename from neonvm/tools/vm-builder/files/sshd_config
rename to vm-builder/files/sshd_config
diff --git a/neonvm/tools/vm-builder/files/udev-init.sh b/vm-builder/files/udev-init.sh
similarity index 100%
rename from neonvm/tools/vm-builder/files/udev-init.sh
rename to vm-builder/files/udev-init.sh
diff --git a/neonvm/tools/vm-builder/files/vector.yaml b/vm-builder/files/vector.yaml
similarity index 100%
rename from neonvm/tools/vm-builder/files/vector.yaml
rename to vm-builder/files/vector.yaml
diff --git a/neonvm/tools/vm-builder/files/vmacpi b/vm-builder/files/vmacpi
similarity index 100%
rename from neonvm/tools/vm-builder/files/vmacpi
rename to vm-builder/files/vmacpi
diff --git a/neonvm/tools/vm-builder/files/vminit b/vm-builder/files/vminit
similarity index 100%
rename from neonvm/tools/vm-builder/files/vminit
rename to vm-builder/files/vminit
diff --git a/neonvm/tools/vm-builder/files/vmshutdown b/vm-builder/files/vmshutdown
similarity index 100%
rename from neonvm/tools/vm-builder/files/vmshutdown
rename to vm-builder/files/vmshutdown
diff --git a/neonvm/tools/vm-builder/files/vmstart b/vm-builder/files/vmstart
similarity index 100%
rename from neonvm/tools/vm-builder/files/vmstart
rename to vm-builder/files/vmstart
diff --git a/neonvm/tools/vm-builder/main.go b/vm-builder/main.go
similarity index 100%
rename from neonvm/tools/vm-builder/main.go
rename to vm-builder/main.go
diff --git a/deploy/vmscrape.yaml b/vmscrape.yaml
similarity index 100%
rename from deploy/vmscrape.yaml
rename to vmscrape.yaml