diff --git a/package.json b/package.json
index 3bd87196e8..b4c255df82 100644
--- a/package.json
+++ b/package.json
@@ -4,9 +4,7 @@
   "packageManager": "yarn@1.22.22",
   "workspaces": [
     "excalidraw-app",
-    "packages/excalidraw",
-    "packages/utils",
-    "packages/math",
+    "packages/*",
     "examples/excalidraw",
     "examples/excalidraw/*"
   ],
diff --git a/packages/deltas/package.json b/packages/deltas/package.json
new file mode 100644
index 0000000000..c5ace29313
--- /dev/null
+++ b/packages/deltas/package.json
@@ -0,0 +1,38 @@
+{
+  "name": "@excalidraw/deltas",
+  "version": "0.0.1",
+  "main": "./dist/prod/index.js",
+  "type": "module",
+  "module": "./dist/prod/index.js",
+  "exports": {
+    ".": {
+      "development": "./dist/dev/index.js",
+      "default": "./dist/prod/index.js"
+    }
+  },
+  "types": "./dist/types/index.d.ts",
+  "files": [
+    "dist/*"
+  ],
+  "description": "Excalidraw utilities for handling deltas",
+  "publishConfig": {
+    "access": "public"
+  },
+  "license": "MIT",
+  "keywords": [
+    "excalidraw",
+    "excalidraw-deltas"
+  ],
+  "dependencies": {
+    "nanoid": "5.0.9",
+    "roughjs": "4.6.6"
+  },
+  "devDependencies": {},
+  "bugs": "https://github.com/excalidraw/excalidraw/issues",
+  "repository": "https://github.com/excalidraw/excalidraw",
+  "scripts": {
+    "gen:types": "rm -rf types && tsc",
+    "build:esm": "rm -rf dist && node ../../scripts/buildShared.js && yarn gen:types",
+    "pack": "yarn build:umd && yarn pack"
+  }
+}
diff --git a/packages/deltas/src/common/delta.ts b/packages/deltas/src/common/delta.ts
new file mode 100644
index 0000000000..799f359bd9
--- /dev/null
+++ b/packages/deltas/src/common/delta.ts
@@ -0,0 +1,357 @@
+import { arrayToObject, assertNever } from "./utils";
+
+/**
+ * Represents the difference between two objects of the same type.
+ *
+ * Both `deleted` and `inserted` partials represent the same set of added, removed or updated properties, where:
+ * - `deleted` is a set of all the deleted values
+ * - `inserted` is a set of all the inserted (added, updated) values
+ *
+ * Keeping it as pure object (without transient state, side-effects, etc.), so we won't have to instantiate it on load.
+ */
+export class Delta<T> {
+  private constructor(
+    public readonly deleted: Partial<T>,
+    public readonly inserted: Partial<T>,
+  ) {}
+
+  public static create<T>(
+    deleted: Partial<T>,
+    inserted: Partial<T>,
+    modifier?: (delta: Partial<T>) => Partial<T>,
+    modifierOptions?: "deleted" | "inserted",
+  ) {
+    const modifiedDeleted =
+      modifier && modifierOptions !== "inserted" ? modifier(deleted) : deleted;
+    const modifiedInserted =
+      modifier && modifierOptions !== "deleted" ? modifier(inserted) : inserted;
+
+    return new Delta(modifiedDeleted, modifiedInserted);
+  }
+
+  /**
+   * Calculates the delta between two objects.
+   *
+   * @param prevObject - The previous state of the object.
+   * @param nextObject - The next state of the object.
+   *
+   * @returns new delta instance.
+   */
+  public static calculate<T extends { [key: string]: any }>(
+    prevObject: T,
+    nextObject: T,
+    modifier?: (partial: Partial<T>) => Partial<T>,
+    postProcess?: (
+      deleted: Partial<T>,
+      inserted: Partial<T>,
+    ) => [Partial<T>, Partial<T>],
+  ): Delta<T> {
+    if (prevObject === nextObject) {
+      return Delta.empty();
+    }
+
+    const deleted = {} as Partial<T>;
+    const inserted = {} as Partial<T>;
+
+    // O(n^3) here for elements, but it's not as bad as it looks:
+    // - we do this only on store recordings, not on every frame (not for ephemerals)
+    // - we do this only on previously detected changed elements
+    // - we do shallow compare only on the first level of properties (not going any deeper)
+    // - # of properties is reasonably small
+    for (const key of this.distinctKeysIterator(
+      "full",
+      prevObject,
+      nextObject,
+    )) {
+      deleted[key as keyof T] = prevObject[key];
+      inserted[key as keyof T] = nextObject[key];
+    }
+
+    const [processedDeleted, processedInserted] = postProcess
+      ? postProcess(deleted, inserted)
+      : [deleted, inserted];
+
+    return Delta.create(processedDeleted, processedInserted, modifier);
+  }
+
+  public static empty() {
+    return new Delta({}, {});
+  }
+
+  public static isEmpty<T>(delta: Delta<T>): boolean {
+    return (
+      !Object.keys(delta.deleted).length && !Object.keys(delta.inserted).length
+    );
+  }
+
+  /**
+   * Merges deleted and inserted object partials.
+   */
+  public static mergeObjects<T extends { [key: string]: unknown }>(
+    prev: T,
+    added: T,
+    removed: T,
+  ) {
+    const cloned = { ...prev };
+
+    for (const key of Object.keys(removed)) {
+      delete cloned[key];
+    }
+
+    return { ...cloned, ...added };
+  }
+
+  /**
+   * Merges deleted and inserted array partials.
+   */
+  public static mergeArrays<T>(
+    prev: readonly T[] | null,
+    added: readonly T[] | null | undefined,
+    removed: readonly T[] | null | undefined,
+    predicate?: (value: T) => string,
+  ) {
+    return Object.values(
+      Delta.mergeObjects(
+        arrayToObject(prev ?? [], predicate),
+        arrayToObject(added ?? [], predicate),
+        arrayToObject(removed ?? [], predicate),
+      ),
+    );
+  }
+
+  /**
+   * Diff object partials as part of the `postProcess`.
+   */
+  public static diffObjects<T, K extends keyof T, V extends T[K][keyof T[K]]>(
+    deleted: Partial<T>,
+    inserted: Partial<T>,
+    property: K,
+    setValue: (prevValue: V | undefined) => V,
+  ) {
+    if (!deleted[property] && !inserted[property]) {
+      return;
+    }
+
+    if (
+      typeof deleted[property] === "object" ||
+      typeof inserted[property] === "object"
+    ) {
+      type RecordLike = Record<string, V | undefined>;
+
+      const deletedObject: RecordLike = deleted[property] ?? {};
+      const insertedObject: RecordLike = inserted[property] ?? {};
+
+      const deletedDifferences = Delta.getLeftDifferences(
+        deletedObject,
+        insertedObject,
+      ).reduce((acc, curr) => {
+        acc[curr] = setValue(deletedObject[curr]);
+        return acc;
+      }, {} as RecordLike);
+
+      const insertedDifferences = Delta.getRightDifferences(
+        deletedObject,
+        insertedObject,
+      ).reduce((acc, curr) => {
+        acc[curr] = setValue(insertedObject[curr]);
+        return acc;
+      }, {} as RecordLike);
+
+      if (
+        Object.keys(deletedDifferences).length ||
+        Object.keys(insertedDifferences).length
+      ) {
+        Reflect.set(deleted, property, deletedDifferences);
+        Reflect.set(inserted, property, insertedDifferences);
+      } else {
+        Reflect.deleteProperty(deleted, property);
+        Reflect.deleteProperty(inserted, property);
+      }
+    }
+  }
+
+  /**
+   * Diff array partials as part of the `postProcess`.
+   */
+  public static diffArrays<T, K extends keyof T, V extends T[K]>(
+    deleted: Partial<T>,
+    inserted: Partial<T>,
+    property: K,
+    groupBy: (value: V extends ArrayLike<infer T> ? T : never) => string,
+  ) {
+    if (!deleted[property] && !inserted[property]) {
+      return;
+    }
+
+    if (Array.isArray(deleted[property]) || Array.isArray(inserted[property])) {
+      const deletedArray = (
+        Array.isArray(deleted[property]) ? deleted[property] : []
+      ) as [];
+      const insertedArray = (
+        Array.isArray(inserted[property]) ? inserted[property] : []
+      ) as [];
+
+      const deletedDifferences = arrayToObject(
+        Delta.getLeftDifferences(
+          arrayToObject(deletedArray, groupBy),
+          arrayToObject(insertedArray, groupBy),
+        ),
+      );
+      const insertedDifferences = arrayToObject(
+        Delta.getRightDifferences(
+          arrayToObject(deletedArray, groupBy),
+          arrayToObject(insertedArray, groupBy),
+        ),
+      );
+
+      if (
+        Object.keys(deletedDifferences).length ||
+        Object.keys(insertedDifferences).length
+      ) {
+        const deletedValue = deletedArray.filter(
+          (x) => deletedDifferences[groupBy ? groupBy(x) : String(x)],
+        );
+        const insertedValue = insertedArray.filter(
+          (x) => insertedDifferences[groupBy ? groupBy(x) : String(x)],
+        );
+
+        Reflect.set(deleted, property, deletedValue);
+        Reflect.set(inserted, property, insertedValue);
+      } else {
+        Reflect.deleteProperty(deleted, property);
+        Reflect.deleteProperty(inserted, property);
+      }
+    }
+  }
+
+  /**
+   * Compares if object1 contains any different value compared to the object2.
+   */
+  public static isLeftDifferent<T extends {}>(
+    object1: T,
+    object2: T,
+    skipShallowCompare = false,
+  ): boolean {
+    const anyDistinctKey = this.distinctKeysIterator(
+      "left",
+      object1,
+      object2,
+      skipShallowCompare,
+    ).next().value;
+
+    return !!anyDistinctKey;
+  }
+
+  /**
+   * Compares if object2 contains any different value compared to the object1.
+   */
+  public static isRightDifferent<T extends {}>(
+    object1: T,
+    object2: T,
+    skipShallowCompare = false,
+  ): boolean {
+    const anyDistinctKey = this.distinctKeysIterator(
+      "right",
+      object1,
+      object2,
+      skipShallowCompare,
+    ).next().value;
+
+    return !!anyDistinctKey;
+  }
+
+  /**
+   * Returns all the object1 keys that have distinct values.
+   */
+  public static getLeftDifferences<T extends {}>(
+    object1: T,
+    object2: T,
+    skipShallowCompare = false,
+  ) {
+    return Array.from(
+      this.distinctKeysIterator("left", object1, object2, skipShallowCompare),
+    );
+  }
+
+  /**
+   * Returns all the object2 keys that have distinct values.
+   */
+  public static getRightDifferences<T extends {}>(
+    object1: T,
+    object2: T,
+    skipShallowCompare = false,
+  ) {
+    return Array.from(
+      this.distinctKeysIterator("right", object1, object2, skipShallowCompare),
+    );
+  }
+
+  /**
+   * Iterator comparing values of object properties based on the passed joining strategy.
+   *
+   * @yields keys of properties with different values
+   *
+   * WARN: it's based on shallow compare performed only on the first level and doesn't go deeper than that.
+   */
+  private static *distinctKeysIterator<T extends {}>(
+    join: "left" | "right" | "full",
+    object1: T,
+    object2: T,
+    skipShallowCompare = false,
+  ) {
+    if (object1 === object2) {
+      return;
+    }
+
+    let keys: string[] = [];
+
+    if (join === "left") {
+      keys = Object.keys(object1);
+    } else if (join === "right") {
+      keys = Object.keys(object2);
+    } else if (join === "full") {
+      keys = Array.from(
+        new Set([...Object.keys(object1), ...Object.keys(object2)]),
+      );
+    } else {
+      assertNever(join, "Unknown distinctKeysIterator's join param");
+    }
+
+    for (const key of keys) {
+      const object1Value = object1[key as keyof T];
+      const object2Value = object2[key as keyof T];
+
+      if (object1Value !== object2Value) {
+        if (
+          !skipShallowCompare &&
+          typeof object1Value === "object" &&
+          typeof object2Value === "object" &&
+          object1Value !== null &&
+          object2Value !== null &&
+          this.isShallowEqual(object1Value, object2Value)
+        ) {
+          continue;
+        }
+
+        yield key;
+      }
+    }
+  }
+
+  private static isShallowEqual(object1: any, object2: any) {
+    const keys1 = Object.keys(object1);
+    const keys2 = Object.keys(object1);
+
+    if (keys1.length !== keys2.length) {
+      return false;
+    }
+
+    for (const key of keys1) {
+      if (object1[key] !== object2[key]) {
+        return false;
+      }
+    }
+
+    return true;
+  }
+}
diff --git a/packages/deltas/src/common/interfaces.ts b/packages/deltas/src/common/interfaces.ts
new file mode 100644
index 0000000000..ca75d755e1
--- /dev/null
+++ b/packages/deltas/src/common/interfaces.ts
@@ -0,0 +1,21 @@
+/**
+ * Encapsulates a set of application-level `Delta`s.
+ */
+export interface DeltaContainer<T> {
+  /**
+   * Inverses the `Delta`s while creating a new `DeltaContainer` instance.
+   */
+  inverse(): DeltaContainer<T>;
+
+  /**
+   * Applies the `Delta`s to the previous object.
+   *
+   * @returns a tuple of the next object `T` with applied `Delta`s, and `boolean`, indicating whether the applied deltas resulted in a visible change.
+   */
+  applyTo(previous: T, ...options: unknown[]): [T, boolean];
+
+  /**
+   * Checks whether all `Delta`s are empty.
+   */
+  isEmpty(): boolean;
+}
diff --git a/packages/deltas/src/common/utils.ts b/packages/deltas/src/common/utils.ts
new file mode 100644
index 0000000000..597014f613
--- /dev/null
+++ b/packages/deltas/src/common/utils.ts
@@ -0,0 +1,152 @@
+import { Random } from "roughjs/bin/math";
+import { nanoid } from "nanoid";
+
+import type {
+  AppState,
+  ObservedAppState,
+  ElementsMap,
+  ExcalidrawElement,
+  ElementUpdate,
+} from "../excalidraw-types";
+
+/**
+ * Transform array into an object, use only when array order is irrelevant.
+ */
+export const arrayToObject = <T>(
+  array: readonly T[],
+  groupBy?: (value: T) => string | number,
+) =>
+  array.reduce((acc, value) => {
+    acc[groupBy ? groupBy(value) : String(value)] = value;
+    return acc;
+  }, {} as { [key: string]: T });
+
+/**
+ * Transforms array of elements with `id` property into into a Map grouped by `id`.
+ */
+export const elementsToMap = <T extends { id: string }>(
+  items: readonly T[],
+) => {
+  return items.reduce((acc: Map<string, T>, element) => {
+    acc.set(element.id, element);
+    return acc;
+  }, new Map());
+};
+
+// --
+
+// hidden non-enumerable property for runtime checks
+const hiddenObservedAppStateProp = "__observedAppState";
+
+export const getObservedAppState = (appState: AppState): ObservedAppState => {
+  const observedAppState = {
+    name: appState.name,
+    editingGroupId: appState.editingGroupId,
+    viewBackgroundColor: appState.viewBackgroundColor,
+    selectedElementIds: appState.selectedElementIds,
+    selectedGroupIds: appState.selectedGroupIds,
+    editingLinearElementId: appState.editingLinearElement?.elementId || null,
+    selectedLinearElementId: appState.selectedLinearElement?.elementId || null,
+    croppingElementId: appState.croppingElementId,
+  };
+
+  Reflect.defineProperty(observedAppState, hiddenObservedAppStateProp, {
+    value: true,
+    enumerable: false,
+  });
+
+  return observedAppState;
+};
+
+// ------------------------------------------------------------
+
+export const assertNever = (value: never, message: string): never => {
+  throw new Error(`${message}: "${value}".`);
+};
+
+// ------------------------------------------------------------
+
+export const getNonDeletedGroupIds = (elements: ElementsMap) => {
+  const nonDeletedGroupIds = new Set<string>();
+
+  for (const [, element] of elements) {
+    // defensive check
+    if (element.isDeleted) {
+      continue;
+    }
+
+    // defensive fallback
+    for (const groupId of element.groupIds ?? []) {
+      nonDeletedGroupIds.add(groupId);
+    }
+  }
+
+  return nonDeletedGroupIds;
+};
+
+// ------------------------------------------------------------
+
+// @ts-expect-error
+export const isTestEnv = () => import.meta.env.MODE === "test";
+
+// @ts-expect-error
+export const isDevEnv = () => import.meta.env.MODE === "development";
+
+// @ts-expect-error
+export const isServerEnv = () => import.meta.env.MODE === "server";
+
+export const shouldThrow = () => isDevEnv() || isTestEnv() || isServerEnv();
+
+// ------------------------------------------------------------
+
+let random = new Random(Date.now());
+let testIdBase = 0;
+
+export const randomInteger = () => Math.floor(random.next() * 2 ** 31);
+
+export const reseed = (seed: number) => {
+  random = new Random(seed);
+  testIdBase = 0;
+};
+
+export const randomId = () => (isTestEnv() ? `id${testIdBase++}` : nanoid());
+
+// ------------------------------------------------------------
+
+export const getUpdatedTimestamp = () => (isTestEnv() ? 1 : Date.now());
+
+// ------------------------------------------------------------
+
+export const newElementWith = <TElement extends ExcalidrawElement>(
+  element: TElement,
+  updates: ElementUpdate<TElement>,
+  /** pass `true` to always regenerate */
+  force = false,
+): TElement => {
+  let didChange = false;
+  for (const key in updates) {
+    const value = (updates as any)[key];
+    if (typeof value !== "undefined") {
+      if (
+        (element as any)[key] === value &&
+        // if object, always update because its attrs could have changed
+        (typeof value !== "object" || value === null)
+      ) {
+        continue;
+      }
+      didChange = true;
+    }
+  }
+
+  if (!didChange && !force) {
+    return element;
+  }
+
+  return {
+    ...element,
+    ...updates,
+    updated: getUpdatedTimestamp(),
+    version: element.version + 1,
+    versionNonce: randomInteger(),
+  };
+};
diff --git a/packages/deltas/src/containers/appstate.ts b/packages/deltas/src/containers/appstate.ts
new file mode 100644
index 0000000000..c070d3414b
--- /dev/null
+++ b/packages/deltas/src/containers/appstate.ts
@@ -0,0 +1,404 @@
+import { Delta } from "../common/delta";
+import {
+  assertNever,
+  getNonDeletedGroupIds,
+  getObservedAppState,
+  isDevEnv,
+  isTestEnv,
+  shouldThrow,
+} from "../common/utils";
+
+import type { DeltaContainer } from "../common/interfaces";
+import type {
+  AppState,
+  ObservedAppState,
+  DTO,
+  SceneElementsMap,
+  ValueOf,
+  ObservedElementsAppState,
+  ObservedStandaloneAppState,
+  SubtypeOf,
+} from "../excalidraw-types";
+
+export class AppStateDelta implements DeltaContainer<AppState> {
+  private constructor(public readonly delta: Delta<ObservedAppState>) {}
+
+  public static calculate<T extends ObservedAppState>(
+    prevAppState: T,
+    nextAppState: T,
+  ): AppStateDelta {
+    const delta = Delta.calculate(
+      prevAppState,
+      nextAppState,
+      undefined,
+      AppStateDelta.postProcess,
+    );
+
+    return new AppStateDelta(delta);
+  }
+
+  public static restore(appStateDeltaDTO: DTO<AppStateDelta>): AppStateDelta {
+    const { delta } = appStateDeltaDTO;
+    return new AppStateDelta(delta);
+  }
+
+  public static empty() {
+    return new AppStateDelta(Delta.create({}, {}));
+  }
+
+  public inverse(): AppStateDelta {
+    const inversedDelta = Delta.create(this.delta.inserted, this.delta.deleted);
+    return new AppStateDelta(inversedDelta);
+  }
+
+  public applyTo(
+    appState: AppState,
+    nextElements: SceneElementsMap,
+  ): [AppState, boolean] {
+    try {
+      const {
+        selectedElementIds: removedSelectedElementIds = {},
+        selectedGroupIds: removedSelectedGroupIds = {},
+      } = this.delta.deleted;
+
+      const {
+        selectedElementIds: addedSelectedElementIds = {},
+        selectedGroupIds: addedSelectedGroupIds = {},
+        selectedLinearElementId,
+        editingLinearElementId,
+        ...directlyApplicablePartial
+      } = this.delta.inserted;
+
+      const mergedSelectedElementIds = Delta.mergeObjects(
+        appState.selectedElementIds,
+        addedSelectedElementIds,
+        removedSelectedElementIds,
+      );
+
+      const mergedSelectedGroupIds = Delta.mergeObjects(
+        appState.selectedGroupIds,
+        addedSelectedGroupIds,
+        removedSelectedGroupIds,
+      );
+
+      //   const selectedLinearElement =
+      //     selectedLinearElementId && nextElements.has(selectedLinearElementId)
+      //       ? new LinearElementEditor(
+      //           nextElements.get(
+      //             selectedLinearElementId,
+      //           ) as NonDeleted<ExcalidrawLinearElement>,
+      //         )
+      //       : null;
+
+      //   const editingLinearElement =
+      //     editingLinearElementId && nextElements.has(editingLinearElementId)
+      //       ? new LinearElementEditor(
+      //           nextElements.get(
+      //             editingLinearElementId,
+      //           ) as NonDeleted<ExcalidrawLinearElement>,
+      //         )
+      //       : null;
+
+      const nextAppState = {
+        ...appState,
+        ...directlyApplicablePartial,
+        selectedElementIds: mergedSelectedElementIds,
+        selectedGroupIds: mergedSelectedGroupIds,
+        // selectedLinearElement:
+        //   typeof selectedLinearElementId !== "undefined"
+        //     ? selectedLinearElement // element was either inserted or deleted
+        //     : appState.selectedLinearElement, // otherwise assign what we had before
+        // editingLinearElement:
+        //   typeof editingLinearElementId !== "undefined"
+        //     ? editingLinearElement // element was either inserted or deleted
+        //     : appState.editingLinearElement, // otherwise assign what we had before
+      };
+
+      const constainsVisibleChanges = this.filterInvisibleChanges(
+        appState,
+        nextAppState,
+        nextElements,
+      );
+
+      return [nextAppState, constainsVisibleChanges];
+    } catch (e) {
+      // shouldn't really happen, but just in case
+      console.error(`Couldn't apply appstate delta`, e);
+
+      if (shouldThrow()) {
+        throw e;
+      }
+
+      return [appState, false];
+    }
+  }
+
+  public isEmpty(): boolean {
+    return Delta.isEmpty(this.delta);
+  }
+
+  /**
+   * It is necessary to post process the partials in case of reference values,
+   * for which we need to calculate the real diff between `deleted` and `inserted`.
+   */
+  private static postProcess<T extends ObservedAppState>(
+    deleted: Partial<T>,
+    inserted: Partial<T>,
+  ): [Partial<T>, Partial<T>] {
+    try {
+      Delta.diffObjects(
+        deleted,
+        inserted,
+        "selectedElementIds",
+        // ts language server has a bit trouble resolving this, so we are giving it a little push
+        (_) => true as ValueOf<T["selectedElementIds"]>,
+      );
+      Delta.diffObjects(
+        deleted,
+        inserted,
+        "selectedGroupIds",
+        (prevValue) => (prevValue ?? false) as ValueOf<T["selectedGroupIds"]>,
+      );
+    } catch (e) {
+      // if postprocessing fails it does not make sense to bubble up, but let's make sure we know about it
+      console.error(`Couldn't postprocess appstate change deltas.`);
+
+      if (isDevEnv() || isTestEnv()) {
+        throw e;
+      }
+    } finally {
+      return [deleted, inserted];
+    }
+  }
+
+  /**
+   * Mutates `nextAppState` be filtering out state related to deleted elements.
+   *
+   * @returns `true` if a visible change is found, `false` otherwise.
+   */
+  private filterInvisibleChanges(
+    prevAppState: AppState,
+    nextAppState: AppState,
+    nextElements: SceneElementsMap,
+  ): boolean {
+    // TODO: #7348 we could still get an empty undo/redo, as we assume that previous appstate does not contain references to deleted elements
+    // which is not always true - i.e. now we do cleanup appstate during history, but we do not do it during remote updates
+    const prevObservedAppState = getObservedAppState(prevAppState);
+    const nextObservedAppState = getObservedAppState(nextAppState);
+
+    const containsStandaloneDifference = Delta.isRightDifferent(
+      AppStateDelta.stripElementsProps(prevObservedAppState),
+      AppStateDelta.stripElementsProps(nextObservedAppState),
+    );
+
+    const containsElementsDifference = Delta.isRightDifferent(
+      AppStateDelta.stripStandaloneProps(prevObservedAppState),
+      AppStateDelta.stripStandaloneProps(nextObservedAppState),
+    );
+
+    if (!containsStandaloneDifference && !containsElementsDifference) {
+      // no change in appstate was detected
+      return false;
+    }
+
+    const visibleDifferenceFlag = {
+      value: containsStandaloneDifference,
+    };
+
+    if (containsElementsDifference) {
+      // filter invisible changes on each iteration
+      const changedElementsProps = Delta.getRightDifferences(
+        AppStateDelta.stripStandaloneProps(prevObservedAppState),
+        AppStateDelta.stripStandaloneProps(nextObservedAppState),
+      ) as Array<keyof ObservedElementsAppState>;
+
+      let nonDeletedGroupIds = new Set<string>();
+
+      if (
+        changedElementsProps.includes("editingGroupId") ||
+        changedElementsProps.includes("selectedGroupIds")
+      ) {
+        // this one iterates through all the non deleted elements, so make sure it's not done twice
+        nonDeletedGroupIds = getNonDeletedGroupIds(nextElements);
+      }
+
+      // check whether delta properties are related to the existing non-deleted elements
+      for (const key of changedElementsProps) {
+        switch (key) {
+          case "selectedElementIds":
+            nextAppState[key] = AppStateDelta.filterSelectedElements(
+              nextAppState[key],
+              nextElements,
+              visibleDifferenceFlag,
+            );
+
+            break;
+          case "selectedGroupIds":
+            nextAppState[key] = AppStateDelta.filterSelectedGroups(
+              nextAppState[key],
+              nonDeletedGroupIds,
+              visibleDifferenceFlag,
+            );
+
+            break;
+          case "croppingElementId": {
+            const croppingElementId = nextAppState[key];
+            const element =
+              croppingElementId && nextElements.get(croppingElementId);
+
+            if (element && !element.isDeleted) {
+              visibleDifferenceFlag.value = true;
+            } else {
+              nextAppState[key] = null;
+            }
+            break;
+          }
+          case "editingGroupId":
+            const editingGroupId = nextAppState[key];
+
+            if (!editingGroupId) {
+              // previously there was an editingGroup (assuming visible), now there is none
+              visibleDifferenceFlag.value = true;
+            } else if (nonDeletedGroupIds.has(editingGroupId)) {
+              // previously there wasn't an editingGroup, now there is one which is visible
+              visibleDifferenceFlag.value = true;
+            } else {
+              // there was assigned an editingGroup now, but it's related to deleted element
+              nextAppState[key] = null;
+            }
+
+            break;
+          case "selectedLinearElementId":
+          case "editingLinearElementId":
+            const appStateKey = AppStateDelta.convertToAppStateKey(key);
+            const linearElement = nextAppState[appStateKey];
+
+            if (!linearElement) {
+              // previously there was a linear element (assuming visible), now there is none
+              visibleDifferenceFlag.value = true;
+            } else {
+              const element = nextElements.get(linearElement.elementId);
+
+              if (element && !element.isDeleted) {
+                // previously there wasn't a linear element, now there is one which is visible
+                visibleDifferenceFlag.value = true;
+              } else {
+                // there was assigned a linear element now, but it's deleted
+                nextAppState[appStateKey] = null;
+              }
+            }
+
+            break;
+          default: {
+            assertNever(key, `Unknown ObservedElementsAppState's key "${key}"`);
+          }
+        }
+      }
+    }
+
+    return visibleDifferenceFlag.value;
+  }
+
+  private static convertToAppStateKey(
+    key: keyof Pick<
+      ObservedElementsAppState,
+      "selectedLinearElementId" | "editingLinearElementId"
+    >,
+  ): keyof Pick<AppState, "selectedLinearElement" | "editingLinearElement"> {
+    switch (key) {
+      case "selectedLinearElementId":
+        return "selectedLinearElement";
+      case "editingLinearElementId":
+        return "editingLinearElement";
+    }
+  }
+
+  private static filterSelectedElements(
+    selectedElementIds: AppState["selectedElementIds"],
+    elements: SceneElementsMap,
+    visibleDifferenceFlag: { value: boolean },
+  ) {
+    const ids = Object.keys(selectedElementIds);
+
+    if (!ids.length) {
+      // previously there were ids (assuming related to visible elements), now there are none
+      visibleDifferenceFlag.value = true;
+      return selectedElementIds;
+    }
+
+    const nextSelectedElementIds = { ...selectedElementIds };
+
+    for (const id of ids) {
+      const element = elements.get(id);
+
+      if (element && !element.isDeleted) {
+        // there is a selected element id related to a visible element
+        visibleDifferenceFlag.value = true;
+      } else {
+        delete nextSelectedElementIds[id];
+      }
+    }
+
+    return nextSelectedElementIds;
+  }
+
+  private static filterSelectedGroups(
+    selectedGroupIds: AppState["selectedGroupIds"],
+    nonDeletedGroupIds: Set<string>,
+    visibleDifferenceFlag: { value: boolean },
+  ) {
+    const ids = Object.keys(selectedGroupIds);
+
+    if (!ids.length) {
+      // previously there were ids (assuming related to visible groups), now there are none
+      visibleDifferenceFlag.value = true;
+      return selectedGroupIds;
+    }
+
+    const nextSelectedGroupIds = { ...selectedGroupIds };
+
+    for (const id of Object.keys(nextSelectedGroupIds)) {
+      if (nonDeletedGroupIds.has(id)) {
+        // there is a selected group id related to a visible group
+        visibleDifferenceFlag.value = true;
+      } else {
+        delete nextSelectedGroupIds[id];
+      }
+    }
+
+    return nextSelectedGroupIds;
+  }
+
+  private static stripElementsProps(
+    delta: Partial<ObservedAppState>,
+  ): Partial<ObservedStandaloneAppState> {
+    // WARN: Do not remove the type-casts as they here to ensure proper type checks
+    const {
+      editingGroupId,
+      selectedGroupIds,
+      selectedElementIds,
+      editingLinearElementId,
+      selectedLinearElementId,
+      croppingElementId,
+      ...standaloneProps
+    } = delta as ObservedAppState;
+
+    return standaloneProps as SubtypeOf<
+      typeof standaloneProps,
+      ObservedStandaloneAppState
+    >;
+  }
+
+  private static stripStandaloneProps(
+    delta: Partial<ObservedAppState>,
+  ): Partial<ObservedElementsAppState> {
+    // WARN: Do not remove the type-casts as they here to ensure proper type checks
+    const { name, viewBackgroundColor, ...elementsProps } =
+      delta as ObservedAppState;
+
+    return elementsProps as SubtypeOf<
+      typeof elementsProps,
+      ObservedElementsAppState
+    >;
+  }
+}
diff --git a/packages/deltas/src/containers/elements.ts b/packages/deltas/src/containers/elements.ts
new file mode 100644
index 0000000000..77846d9f6a
--- /dev/null
+++ b/packages/deltas/src/containers/elements.ts
@@ -0,0 +1,825 @@
+import { Delta } from "../common/delta";
+import { elementsToMap, newElementWith, shouldThrow } from "../common/utils";
+
+import type { DeltaContainer } from "../common/interfaces";
+import type {
+  ExcalidrawElement,
+  ElementUpdate,
+  Ordered,
+  SceneElementsMap,
+  DTO,
+  OrderedExcalidrawElement,
+  ExcalidrawImageElement,
+} from "../excalidraw-types";
+
+// CFDO: consider adding here (nonnullable) version & versionNonce & updated (so that we have correct versions when recunstructing from remote)
+type ElementPartial<T extends ExcalidrawElement = ExcalidrawElement> =
+  ElementUpdate<Ordered<T>>;
+
+/**
+ * Elements delta is a low level primitive to encapsulate property changes between two sets of elements.
+ * It does so by encapsulating forward and backward `Delta`s, allowing to time-travel in both directions.
+ */
+export class ElementsDelta implements DeltaContainer<SceneElementsMap> {
+  private constructor(
+    public readonly added: Record<string, Delta<ElementPartial>>,
+    public readonly removed: Record<string, Delta<ElementPartial>>,
+    public readonly updated: Record<string, Delta<ElementPartial>>,
+  ) {}
+
+  public static create(
+    added: Record<string, Delta<ElementPartial>>,
+    removed: Record<string, Delta<ElementPartial>>,
+    updated: Record<string, Delta<ElementPartial>>,
+    options: {
+      shouldRedistribute: boolean;
+    } = {
+      shouldRedistribute: false,
+      // CFDO: don't forget to re-enable
+    },
+  ) {
+    const { shouldRedistribute } = options;
+    let delta: ElementsDelta;
+
+    if (shouldRedistribute) {
+      const nextAdded: Record<string, Delta<ElementPartial>> = {};
+      const nextRemoved: Record<string, Delta<ElementPartial>> = {};
+      const nextUpdated: Record<string, Delta<ElementPartial>> = {};
+
+      const deltas = [
+        ...Object.entries(added),
+        ...Object.entries(removed),
+        ...Object.entries(updated),
+      ];
+
+      for (const [id, delta] of deltas) {
+        if (this.satisfiesAddition(delta)) {
+          nextAdded[id] = delta;
+        } else if (this.satisfiesRemoval(delta)) {
+          nextRemoved[id] = delta;
+        } else {
+          nextUpdated[id] = delta;
+        }
+      }
+
+      delta = new ElementsDelta(nextAdded, nextRemoved, nextUpdated);
+    } else {
+      delta = new ElementsDelta(added, removed, updated);
+    }
+
+    if (shouldThrow()) {
+      ElementsDelta.validate(delta, "added", this.satisfiesAddition);
+      ElementsDelta.validate(delta, "removed", this.satisfiesRemoval);
+      ElementsDelta.validate(delta, "updated", this.satisfiesUpdate);
+    }
+
+    return delta;
+  }
+
+  public static restore(elementsDeltaDTO: DTO<ElementsDelta>): ElementsDelta {
+    const { added, removed, updated } = elementsDeltaDTO;
+    return ElementsDelta.create(added, removed, updated);
+  }
+
+  private static satisfiesAddition = ({
+    deleted,
+    inserted,
+  }: Delta<ElementPartial>) =>
+    // dissallowing added as "deleted", which could cause issues when resolving conflicts
+    deleted.isDeleted === true && !inserted.isDeleted;
+
+  private static satisfiesRemoval = ({
+    deleted,
+    inserted,
+  }: Delta<ElementPartial>) =>
+    !deleted.isDeleted && inserted.isDeleted === true;
+
+  private static satisfiesUpdate = ({
+    deleted,
+    inserted,
+  }: Delta<ElementPartial>) => !!deleted.isDeleted === !!inserted.isDeleted;
+
+  private static validate(
+    elementsDelta: ElementsDelta,
+    type: "added" | "removed" | "updated",
+    satifies: (delta: Delta<ElementPartial>) => boolean,
+  ) {
+    for (const [id, delta] of Object.entries(elementsDelta[type])) {
+      if (!satifies(delta)) {
+        console.error(
+          `Broken invariant for "${type}" delta, element "${id}", delta:`,
+          delta,
+        );
+        throw new Error(`ElementsDelta invariant broken for element "${id}".`);
+      }
+    }
+  }
+
+  /**
+   * Calculates the `Delta`s between the previous and next set of elements.
+   *
+   * @param prevElements - Map representing the previous state of elements.
+   * @param nextElements - Map representing the next state of elements.
+   *
+   * @returns `ElementsDelta` instance representing the `Delta` changes between the two sets of elements.
+   */
+  public static calculate<T extends OrderedExcalidrawElement>(
+    prevElements: Map<string, T>,
+    nextElements: Map<string, T>,
+  ): ElementsDelta {
+    if (prevElements === nextElements) {
+      return ElementsDelta.empty();
+    }
+
+    const added: Record<string, Delta<ElementPartial>> = {};
+    const removed: Record<string, Delta<ElementPartial>> = {};
+    const updated: Record<string, Delta<ElementPartial>> = {};
+
+    // this might be needed only in same edge cases, like during collab, when `isDeleted` elements get removed or when we (un)intentionally remove the elements
+    for (const prevElement of prevElements.values()) {
+      const nextElement = nextElements.get(prevElement.id);
+
+      if (!nextElement) {
+        const deleted = { ...prevElement, isDeleted: false } as ElementPartial;
+        const inserted = { isDeleted: true } as ElementPartial;
+
+        const delta = Delta.create(
+          deleted,
+          inserted,
+          ElementsDelta.stripIrrelevantProps,
+        );
+
+        removed[prevElement.id] = delta;
+      }
+    }
+
+    for (const nextElement of nextElements.values()) {
+      const prevElement = prevElements.get(nextElement.id);
+
+      if (!prevElement) {
+        const deleted = { isDeleted: true } as ElementPartial;
+        const inserted = {
+          ...nextElement,
+          isDeleted: false,
+        } as ElementPartial;
+
+        const delta = Delta.create(
+          deleted,
+          inserted,
+          ElementsDelta.stripIrrelevantProps,
+        );
+
+        added[nextElement.id] = delta;
+
+        continue;
+      }
+
+      if (prevElement.versionNonce !== nextElement.versionNonce) {
+        const delta = Delta.calculate<ElementPartial>(
+          prevElement,
+          nextElement,
+          ElementsDelta.stripIrrelevantProps,
+          ElementsDelta.postProcess,
+        );
+
+        if (
+          // making sure we don't get here some non-boolean values (i.e. undefined, null, etc.)
+          typeof prevElement.isDeleted === "boolean" &&
+          typeof nextElement.isDeleted === "boolean" &&
+          prevElement.isDeleted !== nextElement.isDeleted
+        ) {
+          // notice that other props could have been updated as well
+          if (prevElement.isDeleted && !nextElement.isDeleted) {
+            added[nextElement.id] = delta;
+          } else {
+            removed[nextElement.id] = delta;
+          }
+
+          continue;
+        }
+
+        // making sure there are at least some changes
+        if (!Delta.isEmpty(delta)) {
+          updated[nextElement.id] = delta;
+        }
+      }
+    }
+
+    return ElementsDelta.create(added, removed, updated);
+  }
+
+  public static empty() {
+    return ElementsDelta.create({}, {}, {});
+  }
+
+  public inverse(): ElementsDelta {
+    const inverseInternal = (deltas: Record<string, Delta<ElementPartial>>) => {
+      const inversedDeltas: Record<string, Delta<ElementPartial>> = {};
+
+      for (const [id, delta] of Object.entries(deltas)) {
+        inversedDeltas[id] = Delta.create(delta.inserted, delta.deleted);
+      }
+
+      return inversedDeltas;
+    };
+
+    const added = inverseInternal(this.added);
+    const removed = inverseInternal(this.removed);
+    const updated = inverseInternal(this.updated);
+
+    // notice we inverse removed with added not to break the invariants
+    // notice we force generate a new id
+    return ElementsDelta.create(removed, added, updated);
+  }
+
+  public isEmpty(): boolean {
+    return (
+      Object.keys(this.added).length === 0 &&
+      Object.keys(this.removed).length === 0 &&
+      Object.keys(this.updated).length === 0
+    );
+  }
+
+  /**
+   * Update delta/s based on the existing elements.
+   *
+   * @param elements current elements
+   * @param modifierOptions defines which of the delta (`deleted` or `inserted`) will be updated
+   * @returns new instance with modified delta/s
+   */
+  public applyLatestChanges(
+    elements: SceneElementsMap,
+    modifierOptions: "deleted" | "inserted",
+  ): ElementsDelta {
+    const modifier =
+      (element: OrderedExcalidrawElement) => (partial: ElementPartial) => {
+        const latestPartial: { [key: string]: unknown } = {};
+
+        for (const key of Object.keys(partial) as Array<keyof typeof partial>) {
+          // do not update following props:
+          // - `boundElements`, as it is a reference value which is postprocessed to contain only deleted/inserted keys
+          switch (key) {
+            case "boundElements":
+              latestPartial[key] = partial[key];
+              break;
+            default:
+              latestPartial[key] = element[key];
+          }
+        }
+
+        return latestPartial;
+      };
+
+    const applyLatestChangesInternal = (
+      deltas: Record<string, Delta<ElementPartial>>,
+    ) => {
+      const modifiedDeltas: Record<string, Delta<ElementPartial>> = {};
+
+      for (const [id, delta] of Object.entries(deltas)) {
+        const existingElement = elements.get(id);
+
+        if (existingElement) {
+          const modifiedDelta = Delta.create(
+            delta.deleted,
+            delta.inserted,
+            modifier(existingElement),
+            modifierOptions,
+          );
+
+          modifiedDeltas[id] = modifiedDelta;
+        } else {
+          modifiedDeltas[id] = delta;
+        }
+      }
+
+      return modifiedDeltas;
+    };
+
+    const added = applyLatestChangesInternal(this.added);
+    const removed = applyLatestChangesInternal(this.removed);
+    const updated = applyLatestChangesInternal(this.updated);
+
+    return ElementsDelta.create(added, removed, updated, {
+      shouldRedistribute: true, // redistribute the deltas as `isDeleted` could have been updated
+    });
+  }
+
+  // CFDO: does it make sense having a separate snapshot?
+  public applyTo(
+    elements: SceneElementsMap,
+    elementsSnapshot: Map<string, OrderedExcalidrawElement>,
+  ): [SceneElementsMap, boolean] {
+    const nextElements = new Map(elements) as SceneElementsMap;
+    let changedElements: Map<string, OrderedExcalidrawElement>;
+
+    const flags = {
+      containsVisibleDifference: false,
+      containsZindexDifference: false,
+    };
+
+    // mimic a transaction by applying deltas into `nextElements` (always new instance, no mutation)
+    try {
+      const applyDeltas = ElementsDelta.createApplier(
+        nextElements,
+        elementsSnapshot,
+        flags,
+      );
+
+      const addedElements = applyDeltas("added", this.added);
+      const removedElements = applyDeltas("removed", this.removed);
+      const updatedElements = applyDeltas("updated", this.updated);
+
+      // CFDO I: don't forget to fix this part
+      // const affectedElements = this.resolveConflicts(elements, nextElements);
+
+      // TODO: #7348 validate elements semantically and syntactically the changed elements, in case they would result data integrity issues
+      changedElements = new Map([
+        ...addedElements,
+        ...removedElements,
+        ...updatedElements,
+        // ...affectedElements,
+      ]);
+    } catch (e) {
+      console.error(`Couldn't apply elements delta`, e);
+
+      if (shouldThrow()) {
+        throw e;
+      }
+
+      // should not really happen, but just in case we cannot apply deltas, let's return the previous elements with visible change set to `true`
+      // even though there is obviously no visible change, returning `false` could be dangerous, as i.e.:
+      // in the worst case, it could lead into iterating through the whole stack with no possibility to redo
+      // instead, the worst case when returning `true` is an empty undo / redo
+      return [elements, true];
+    }
+
+    try {
+      // CFDO I: don't forget to fix this part
+      // // TODO: #7348 refactor away mutations below, so that we couldn't end up in an incosistent state
+      // ElementsDelta.redrawTextBoundingBoxes(nextElements, changedElements);
+      // // the following reorder performs also mutations, but only on new instances of changed elements
+      // // (unless something goes really bad and it fallbacks to fixing all invalid indices)
+      // nextElements = ElementsDelta.reorderElements(
+      //   nextElements,
+      //   changedElements,
+      //   flags,
+      // );
+      // // Need ordered nextElements to avoid z-index binding issues
+      // ElementsDelta.redrawBoundArrows(nextElements, changedElements);
+    } catch (e) {
+      console.error(
+        `Couldn't mutate elements after applying elements change`,
+        e,
+      );
+
+      if (shouldThrow()) {
+        throw e;
+      }
+    } finally {
+      return [nextElements, flags.containsVisibleDifference];
+    }
+  }
+
+  private static createApplier =
+    (
+      nextElements: SceneElementsMap,
+      snapshot: Map<string, OrderedExcalidrawElement>,
+      flags: {
+        containsVisibleDifference: boolean;
+        containsZindexDifference: boolean;
+      },
+    ) =>
+    (
+      type: "added" | "removed" | "updated",
+      deltas: Record<string, Delta<ElementPartial>>,
+    ) => {
+      const getElement = ElementsDelta.createGetter(
+        type,
+        nextElements,
+        snapshot,
+        flags,
+      );
+
+      return Object.entries(deltas).reduce((acc, [id, delta]) => {
+        const element = getElement(id, delta.inserted);
+
+        if (element) {
+          const newElement = ElementsDelta.applyDelta(element, delta, flags);
+          nextElements.set(newElement.id, newElement);
+          acc.set(newElement.id, newElement);
+        }
+
+        return acc;
+      }, new Map<string, OrderedExcalidrawElement>());
+    };
+
+  private static createGetter =
+    (
+      type: "added" | "removed" | "updated",
+      elements: SceneElementsMap,
+      snapshot: Map<string, OrderedExcalidrawElement>,
+      flags: {
+        containsVisibleDifference: boolean;
+        containsZindexDifference: boolean;
+      },
+    ) =>
+    (id: string, partial: ElementPartial) => {
+      let element = elements.get(id);
+
+      if (!element) {
+        // always fallback to the local snapshot, in cases when we cannot find the element in the elements array
+        element = snapshot.get(id);
+
+        if (element) {
+          // as the element was brought from the snapshot, it automatically results in a possible zindex difference
+          flags.containsZindexDifference = true;
+
+          // as the element was force deleted, we need to check if adding it back results in a visible change
+          if (
+            partial.isDeleted === false ||
+            (partial.isDeleted !== true && element.isDeleted === false)
+          ) {
+            flags.containsVisibleDifference = true;
+          }
+        } else if (type === "added") {
+          // for additions the element does not have to exist (i.e. remote update)
+          // CFDO II: the version itself might be different!
+          element = newElementWith(
+            { id, version: 1 } as OrderedExcalidrawElement,
+            {
+              ...partial,
+            },
+          );
+        }
+      }
+
+      return element;
+    };
+
+  private static applyDelta(
+    element: OrderedExcalidrawElement,
+    delta: Delta<ElementPartial>,
+    flags: {
+      containsVisibleDifference: boolean;
+      containsZindexDifference: boolean;
+    } = {
+      // by default we don't care about about the flags
+      containsVisibleDifference: true,
+      containsZindexDifference: true,
+    },
+  ) {
+    const { boundElements, ...directlyApplicablePartial } = delta.inserted;
+
+    if (
+      delta.deleted.boundElements?.length ||
+      delta.inserted.boundElements?.length
+    ) {
+      const mergedBoundElements = Delta.mergeArrays(
+        element.boundElements,
+        delta.inserted.boundElements,
+        delta.deleted.boundElements,
+        (x) => x.id,
+      );
+
+      Object.assign(directlyApplicablePartial, {
+        boundElements: mergedBoundElements,
+      });
+    }
+
+    // CFDO: this looks wrong
+    if (element.type === "image") {
+      const _delta = delta as Delta<ElementPartial<ExcalidrawImageElement>>;
+      // we want to override `crop` only if modified so that we don't reset
+      // when undoing/redoing unrelated change
+      if (_delta.deleted.crop || _delta.inserted.crop) {
+        Object.assign(directlyApplicablePartial, {
+          // apply change verbatim
+          crop: _delta.inserted.crop ?? null,
+        });
+      }
+    }
+
+    if (!flags.containsVisibleDifference) {
+      // strip away fractional index, as even if it would be different, it doesn't have to result in visible change
+      const { index, ...rest } = directlyApplicablePartial;
+      const containsVisibleDifference = ElementsDelta.checkForVisibleDifference(
+        element,
+        rest,
+      );
+
+      flags.containsVisibleDifference = containsVisibleDifference;
+    }
+
+    if (!flags.containsZindexDifference) {
+      flags.containsZindexDifference =
+        delta.deleted.index !== delta.inserted.index;
+    }
+
+    return newElementWith(element, directlyApplicablePartial);
+  }
+
+  /**
+   * Check for visible changes regardless of whether they were removed, added or updated.
+   */
+  private static checkForVisibleDifference(
+    element: OrderedExcalidrawElement,
+    partial: ElementPartial,
+  ) {
+    if (element.isDeleted && partial.isDeleted !== false) {
+      // when it's deleted and partial is not false, it cannot end up with a visible change
+      return false;
+    }
+
+    if (element.isDeleted && partial.isDeleted === false) {
+      // when we add an element, it results in a visible change
+      return true;
+    }
+
+    if (element.isDeleted === false && partial.isDeleted) {
+      // when we remove an element, it results in a visible change
+      return true;
+    }
+
+    // check for any difference on a visible element
+    return Delta.isRightDifferent(element, partial);
+  }
+
+  // /**
+  //  * Resolves conflicts for all previously added, removed and updated elements.
+  //  * Updates the previous deltas with all the changes after conflict resolution.
+  //  *
+  //  * // CFDO: revisit since arrow seem often redrawn incorrectly
+  //  *
+  //  * @returns all elements affected by the conflict resolution
+  //  */
+  // private resolveConflicts(
+  //   prevElements: SceneElementsMap,
+  //   nextElements: SceneElementsMap,
+  // ) {
+  //   const nextAffectedElements = new Map<string, OrderedExcalidrawElement>();
+  //   const updater = (
+  //     element: ExcalidrawElement,
+  //     updates: ElementUpdate<ExcalidrawElement>,
+  //   ) => {
+  //     const nextElement = nextElements.get(element.id); // only ever modify next element!
+  //     if (!nextElement) {
+  //       return;
+  //     }
+
+  //     let affectedElement: OrderedExcalidrawElement;
+
+  //     if (prevElements.get(element.id) === nextElement) {
+  //       // create the new element instance in case we didn't modify the element yet
+  //       // so that we won't end up in an incosistent state in case we would fail in the middle of mutations
+  //       affectedElement = newElementWith(
+  //         nextElement,
+  //         updates as ElementUpdate<OrderedExcalidrawElement>,
+  //       );
+  //     } else {
+  //       affectedElement = mutateElement(
+  //         nextElement,
+  //         updates as ElementUpdate<OrderedExcalidrawElement>,
+  //       );
+  //     }
+
+  //     nextAffectedElements.set(affectedElement.id, affectedElement);
+  //     nextElements.set(affectedElement.id, affectedElement);
+  //   };
+
+  //   // removed delta is affecting the bindings always, as all the affected elements of the removed elements need to be unbound
+  //   for (const id of Object.keys(this.removed)) {
+  //     ElementsDelta.unbindAffected(prevElements, nextElements, id, updater);
+  //   }
+
+  //   // added delta is affecting the bindings always, all the affected elements of the added elements need to be rebound
+  //   for (const id of Object.keys(this.added)) {
+  //     ElementsDelta.rebindAffected(prevElements, nextElements, id, updater);
+  //   }
+
+  //   // updated delta is affecting the binding only in case it contains changed binding or bindable property
+  //   for (const [id] of Array.from(Object.entries(this.updated)).filter(
+  //     ([_, delta]) =>
+  //       Object.keys({ ...delta.deleted, ...delta.inserted }).find((prop) =>
+  //         bindingProperties.has(prop as BindingProp | BindableProp),
+  //       ),
+  //   )) {
+  //     const updatedElement = nextElements.get(id);
+  //     if (!updatedElement || updatedElement.isDeleted) {
+  //       // skip fixing bindings for updates on deleted elements
+  //       continue;
+  //     }
+
+  //     ElementsDelta.rebindAffected(prevElements, nextElements, id, updater);
+  //   }
+
+  //   // filter only previous elements, which were now affected
+  //   const prevAffectedElements = new Map(
+  //     Array.from(prevElements).filter(([id]) => nextAffectedElements.has(id)),
+  //   );
+
+  //   // calculate complete deltas for affected elements, and assign them back to all the deltas
+  //   // technically we could do better here if perf. would become an issue
+  //   const { added, removed, updated } = ElementsDelta.calculate(
+  //     prevAffectedElements,
+  //     nextAffectedElements,
+  //   );
+
+  //   for (const [id, delta] of Object.entries(added)) {
+  //     this.added[id] = delta;
+  //   }
+
+  //   for (const [id, delta] of Object.entries(removed)) {
+  //     this.removed[id] = delta;
+  //   }
+
+  //   for (const [id, delta] of Object.entries(updated)) {
+  //     this.updated[id] = delta;
+  //   }
+
+  //   return nextAffectedElements;
+  // }
+
+  // /**
+  //  * Non deleted affected elements of removed elements (before and after applying delta),
+  //  * should be unbound ~ bindings should not point from non deleted into the deleted element/s.
+  //  */
+  // private static unbindAffected(
+  //   prevElements: SceneElementsMap,
+  //   nextElements: SceneElementsMap,
+  //   id: string,
+  //   updater: (
+  //     element: ExcalidrawElement,
+  //     updates: ElementUpdate<ExcalidrawElement>,
+  //   ) => void,
+  // ) {
+  //   // the instance could have been updated, so make sure we are passing the latest element to each function below
+  //   const prevElement = () => prevElements.get(id); // element before removal
+  //   const nextElement = () => nextElements.get(id); // element after removal
+
+  //   BoundElement.unbindAffected(nextElements, prevElement(), updater);
+  //   BoundElement.unbindAffected(nextElements, nextElement(), updater);
+
+  //   BindableElement.unbindAffected(nextElements, prevElement(), updater);
+  //   BindableElement.unbindAffected(nextElements, nextElement(), updater);
+  // }
+
+  // /**
+  //  * Non deleted affected elements of added or updated element/s (before and after applying delta),
+  //  * should be rebound (if possible) with the current element ~ bindings should be bidirectional.
+  //  */
+  // private static rebindAffected(
+  //   prevElements: SceneElementsMap,
+  //   nextElements: SceneElementsMap,
+  //   id: string,
+  //   updater: (
+  //     element: ExcalidrawElement,
+  //     updates: ElementUpdate<ExcalidrawElement>,
+  //   ) => void,
+  // ) {
+  //   // the instance could have been updated, so make sure we are passing the latest element to each function below
+  //   const prevElement = () => prevElements.get(id); // element before addition / update
+  //   const nextElement = () => nextElements.get(id); // element after addition / update
+
+  //   BoundElement.unbindAffected(nextElements, prevElement(), updater);
+  //   BoundElement.rebindAffected(nextElements, nextElement(), updater);
+
+  //   BindableElement.unbindAffected(
+  //     nextElements,
+  //     prevElement(),
+  //     (element, updates) => {
+  //       // we cannot rebind arrows with bindable element so we don't unbind them at all during rebind (we still need to unbind them on removal)
+  //       // TODO: #7348 add startBinding / endBinding to the `BoundElement` context so that we could rebind arrows and remove this condition
+  //       if (isTextElement(element)) {
+  //         updater(element, updates);
+  //       }
+  //     },
+  //   );
+  //   BindableElement.rebindAffected(nextElements, nextElement(), updater);
+  // }
+
+  // private static redrawTextBoundingBoxes(
+  //   elements: SceneElementsMap,
+  //   changed: Map<string, OrderedExcalidrawElement>,
+  // ) {
+  //   const boxesToRedraw = new Map<
+  //     string,
+  //     { container: OrderedExcalidrawElement; boundText: ExcalidrawTextElement }
+  //   >();
+
+  //   for (const element of changed.values()) {
+  //     if (isBoundToContainer(element)) {
+  //       const { containerId } = element as ExcalidrawTextElement;
+  //       const container = containerId ? elements.get(containerId) : undefined;
+
+  //       if (container) {
+  //         boxesToRedraw.set(container.id, {
+  //           container,
+  //           boundText: element as ExcalidrawTextElement,
+  //         });
+  //       }
+  //     }
+
+  //     if (hasBoundTextElement(element)) {
+  //       const boundTextElementId = getBoundTextElementId(element);
+  //       const boundText = boundTextElementId
+  //         ? elements.get(boundTextElementId)
+  //         : undefined;
+
+  //       if (boundText) {
+  //         boxesToRedraw.set(element.id, {
+  //           container: element,
+  //           boundText: boundText as ExcalidrawTextElement,
+  //         });
+  //       }
+  //     }
+  //   }
+
+  //   for (const { container, boundText } of boxesToRedraw.values()) {
+  //     if (container.isDeleted || boundText.isDeleted) {
+  //       // skip redraw if one of them is deleted, as it would not result in a meaningful redraw
+  //       continue;
+  //     }
+
+  //     redrawTextBoundingBox(boundText, container, elements, false);
+  //   }
+  // }
+
+  // private static redrawBoundArrows(
+  //   elements: SceneElementsMap,
+  //   changed: Map<string, OrderedExcalidrawElement>,
+  // ) {
+  //   for (const element of changed.values()) {
+  //     if (!element.isDeleted && isBindableElement(element)) {
+  //       updateBoundElements(element, elements, {
+  //         changedElements: changed,
+  //       });
+  //     }
+  //   }
+  // }
+
+  // private static reorderElements(
+  //   elements: SceneElementsMap,
+  //   changed: Map<string, OrderedExcalidrawElement>,
+  //   flags: {
+  //     containsVisibleDifference: boolean;
+  //     containsZindexDifference: boolean;
+  //   },
+  // ) {
+  //   if (!flags.containsZindexDifference) {
+  //     return elements;
+  //   }
+
+  //   const unordered = Array.from(elements.values());
+  //   const ordered = orderByFractionalIndex([...unordered]);
+  //   const moved = Delta.getRightDifferences(unordered, ordered, true).reduce(
+  //     (acc, arrayIndex) => {
+  //       const candidate = unordered[Number(arrayIndex)];
+  //       if (candidate && changed.has(candidate.id)) {
+  //         acc.set(candidate.id, candidate);
+  //       }
+
+  //       return acc;
+  //     },
+  //     new Map(),
+  //   );
+
+  //   if (!flags.containsVisibleDifference && moved.size) {
+  //     // we found a difference in order!
+  //     flags.containsVisibleDifference = true;
+  //   }
+
+  //   // synchronize all elements that were actually moved
+  //   // could fallback to synchronizing all invalid indices
+  //   return elementsToMap(syncMovedIndices(ordered, moved)) as typeof elements;
+  // }
+
+  /**
+   * It is necessary to post process the partials in case of reference values,
+   * for which we need to calculate the real diff between `deleted` and `inserted`.
+   */
+  private static postProcess(
+    deleted: ElementPartial,
+    inserted: ElementPartial,
+  ): [ElementPartial, ElementPartial] {
+    try {
+      Delta.diffArrays(deleted, inserted, "boundElements", (x) => x.id);
+    } catch (e) {
+      // if postprocessing fails, it does not make sense to bubble up, but let's make sure we know about it
+      console.error(`Couldn't postprocess elements delta.`);
+
+      if (shouldThrow()) {
+        throw e;
+      }
+    } finally {
+      return [deleted, inserted];
+    }
+  }
+
+  private static stripIrrelevantProps(
+    partial: Partial<OrderedExcalidrawElement>,
+  ): ElementPartial {
+    const { id, updated, version, versionNonce, ...strippedPartial } = partial;
+
+    return strippedPartial;
+  }
+}
diff --git a/packages/deltas/src/excalidraw-types.d.ts b/packages/deltas/src/excalidraw-types.d.ts
new file mode 100644
index 0000000000..0ceca702c5
--- /dev/null
+++ b/packages/deltas/src/excalidraw-types.d.ts
@@ -0,0 +1,26 @@
+export type {
+  AppState,
+  ObservedElementsAppState,
+  ObservedStandaloneAppState,
+  ObservedAppState,
+} from "@excalidraw/excalidraw/dist/excalidraw/types";
+export type {
+  DTO,
+  SubtypeOf,
+  ValueOf,
+} from "@excalidraw/excalidraw/dist/excalidraw/utility-types";
+
+export type {
+  ExcalidrawElement,
+  ExcalidrawImageElement,
+  ExcalidrawTextElement,
+  Ordered,
+  OrderedExcalidrawElement,
+  SceneElementsMap,
+  ElementsMap,
+} from "@excalidraw/excalidraw/dist/excalidraw/element/types";
+export type { ElementUpdate } from "@excalidraw/excalidraw/dist/excalidraw/element/mutateElement";
+export type {
+  BindableProp,
+  BindingProp,
+} from "@excalidraw/excalidraw/dist/excalidraw/element/binding";
diff --git a/packages/deltas/src/index.ts b/packages/deltas/src/index.ts
new file mode 100644
index 0000000000..5e32491f94
--- /dev/null
+++ b/packages/deltas/src/index.ts
@@ -0,0 +1,5 @@
+export type { DeltaContainer } from "./common/interfaces";
+
+export { Delta } from "./common/delta";
+export { ElementsDelta } from "./containers/elements";
+export { AppStateDelta } from "./containers/appstate";
diff --git a/packages/deltas/tsconfig.json b/packages/deltas/tsconfig.json
new file mode 100644
index 0000000000..5fb40d38ca
--- /dev/null
+++ b/packages/deltas/tsconfig.json
@@ -0,0 +1,19 @@
+{
+  "compilerOptions": {
+    "target": "ESNext",
+    "strict": true,
+    "outDir": "dist/types",
+    "skipLibCheck": true,
+    "declaration": true,
+    "emitDeclarationOnly": true,
+    "allowSyntheticDefaultImports": true,
+    "module": "ESNext",
+    "moduleResolution": "Node",
+  },
+  "exclude": [
+    "**/*.test.*",
+    "**/tests/*",
+    "types",
+    "dist",
+  ],
+}
diff --git a/packages/excalidraw/types.ts b/packages/excalidraw/types.ts
index e127999240..11ef683fe3 100644
--- a/packages/excalidraw/types.ts
+++ b/packages/excalidraw/types.ts
@@ -43,7 +43,7 @@ import type { Merge, MaybePromise, ValueOf, MakeBrand } from "./utility-types";
 import type {
   DurableStoreIncrement,
   EphemeralStoreIncrement,
-  StoreActionType as StoreActionType,
+  StoreActionType,
 } from "./store";
 
 export type SocketId = string & { _brand: "SocketId" };
diff --git a/packages/fractional-index/package.json b/packages/fractional-index/package.json
new file mode 100644
index 0000000000..a1d4f980a1
--- /dev/null
+++ b/packages/fractional-index/package.json
@@ -0,0 +1,37 @@
+{
+  "name": "@excalidraw/fractional-index",
+  "version": "0.0.1",
+  "main": "./dist/prod/index.js",
+  "type": "module",
+  "module": "./dist/prod/index.js",
+  "exports": {
+    ".": {
+      "development": "./dist/dev/index.js",
+      "default": "./dist/prod/index.js"
+    }
+  },
+  "types": "./dist/types/index.d.ts",
+  "files": [
+    "dist/*"
+  ],
+  "description": "Excalidraw logic related to fractional indices",
+  "publishConfig": {
+    "access": "public"
+  },
+  "license": "MIT",
+  "keywords": [
+    "excalidraw",
+    "fractional-index"
+  ],
+  "dependencies": {
+    "fractional-indexing": "3.2.0"
+  },
+  "devDependencies": {},
+  "bugs": "https://github.com/excalidraw/excalidraw/issues",
+  "repository": "https://github.com/excalidraw/excalidraw",
+  "scripts": {
+    "gen:types": "rm -rf types && tsc",
+    "build:esm": "rm -rf dist && node ../../scripts/buildShared.js && yarn gen:types",
+    "pack": "yarn build:umd && yarn pack"
+  }
+}
diff --git a/packages/fractional-index/src/fractionalIndex.ts b/packages/fractional-index/src/fractionalIndex.ts
new file mode 100644
index 0000000000..597631253b
--- /dev/null
+++ b/packages/fractional-index/src/fractionalIndex.ts
@@ -0,0 +1,412 @@
+import { generateNKeysBetween } from "fractional-indexing";
+
+// how can I re-use these things?
+// - they should be part of a shared package (could be utils, but with a different export)
+import { mutateElement } from "../../excalidraw/element/mutateElement";
+// import { hasBoundTextElement } from "./element/typeChecks";
+// import { getBoundTextElement } from "./element/textElement";
+// import { arrayToMap } from "./utils";
+
+import type {
+  ExcalidrawElement,
+  FractionalIndex,
+  OrderedExcalidrawElement,
+} from "../../excalidraw/element/types";
+
+/**
+ * Envisioned relation between array order and fractional indices:
+ *
+ * 1) Array (or array-like ordered data structure) should be used as a cache of elements order, hiding the internal fractional indices implementation.
+ * - it's undesirable to perform reorder for each related operation, therefore it's necessary to cache the order defined by fractional indices into an ordered data structure
+ * - it's easy enough to define the order of the elements from the outside (boundaries), without worrying about the underlying structure of fractional indices (especially for the host apps)
+ * - it's necessary to always keep the array support for backwards compatibility (restore) - old scenes, old libraries, supporting multiple excalidraw versions etc.
+ * - it's necessary to always keep the fractional indices in sync with the array order
+ * - elements with invalid indices should be detected and synced, without altering the already valid indices
+ *
+ * 2) Fractional indices should be used to reorder the elements, whenever the cached order is expected to be invalidated.
+ * - as the fractional indices are encoded as part of the elements, it opens up possibilities for incremental-like APIs
+ * - re-order based on fractional indices should be part of (multiplayer) operations such as reconciliation & undo/redo
+ * - technically all the z-index actions could perform also re-order based on fractional indices,but in current state it would not bring much benefits,
+ *   as it's faster & more efficient to perform re-order based on array manipulation and later synchronisation of moved indices with the array order
+ */
+
+/**
+ * Ensure that all elements have valid fractional indices.
+ *
+ * @throws if invalid index is detected.
+ */
+export function validateFractionalIndices(
+  elements: readonly ExcalidrawElement[],
+  {
+    shouldThrow = false,
+    includeBoundTextValidation = false,
+    ignoreLogs,
+    reconciliationContext,
+  }: {
+    shouldThrow: boolean;
+    includeBoundTextValidation: boolean;
+    ignoreLogs?: true;
+    reconciliationContext?: {
+      localElements: ReadonlyArray<ExcalidrawElement>;
+      remoteElements: ReadonlyArray<ExcalidrawElement>;
+    };
+  },
+) {
+  const errorMessages = [];
+  const stringifyElement = (element: ExcalidrawElement | void) =>
+    `${element?.index}:${element?.id}:${element?.type}:${element?.isDeleted}:${element?.version}:${element?.versionNonce}`;
+
+  const indices = elements.map((x) => x.index);
+  for (const [i, index] of indices.entries()) {
+    const predecessorIndex = indices[i - 1];
+    const successorIndex = indices[i + 1];
+
+    if (!isValidFractionalIndex(index, predecessorIndex, successorIndex)) {
+      errorMessages.push(
+        `Fractional indices invariant has been compromised: "${stringifyElement(
+          elements[i - 1],
+        )}", "${stringifyElement(elements[i])}", "${stringifyElement(
+          elements[i + 1],
+        )}"`,
+      );
+    }
+
+    // disabled by default, as we don't fix it
+    //   if (includeBoundTextValidation && hasBoundTextElement(elements[i])) {
+    //     const container = elements[i];
+    //     const text = getBoundTextElement(container, arrayToMap(elements));
+
+    //     if (text && text.index! <= container.index!) {
+    //       errorMessages.push(
+    //         `Fractional indices invariant for bound elements has been compromised: "${stringifyElement(
+    //           text,
+    //         )}", "${stringifyElement(container)}"`,
+    //       );
+    //     }
+    //   }
+    // }
+
+    if (errorMessages.length) {
+      const error = new Error("Invalid fractional indices");
+      const additionalContext = [];
+
+      if (reconciliationContext) {
+        additionalContext.push("Additional reconciliation context:");
+        additionalContext.push(
+          reconciliationContext.localElements.map((x) => stringifyElement(x)),
+        );
+        additionalContext.push(
+          reconciliationContext.remoteElements.map((x) => stringifyElement(x)),
+        );
+      }
+
+      if (!ignoreLogs) {
+        // report just once and with the stacktrace
+        console.error(
+          errorMessages.join("\n\n"),
+          error.stack,
+          elements.map((x) => stringifyElement(x)),
+          ...additionalContext,
+        );
+      }
+
+      if (shouldThrow) {
+        // if enabled, gather all the errors first, throw once
+        throw error;
+      }
+    }
+  }
+}
+
+/**
+ * Order the elements based on the fractional indices.
+ * - when fractional indices are identical, break the tie based on the element id
+ * - when there is no fractional index in one of the elements, respect the order of the array
+ */
+export function orderByFractionalIndex(elements: OrderedExcalidrawElement[]) {
+  return elements.sort((a, b) => {
+    // in case the indices are not the defined at runtime
+    if (isOrderedElement(a) && isOrderedElement(b)) {
+      if (a.index < b.index) {
+        return -1;
+      } else if (a.index > b.index) {
+        return 1;
+      }
+
+      // break ties based on the element id
+      return a.id < b.id ? -1 : 1;
+    }
+
+    // defensively keep the array order
+    return 1;
+  });
+}
+
+/**
+ * Synchronizes invalid fractional indices of moved elements with the array order by mutating passed elements.
+ * If the synchronization fails or the result is invalid, it fallbacks to `syncInvalidIndices`.
+ */
+export function syncMovedIndices(
+  elements: readonly ExcalidrawElement[],
+  movedElements: Map<string, ExcalidrawElement>,
+): OrderedExcalidrawElement[] {
+  try {
+    const indicesGroups = getMovedIndicesGroups(elements, movedElements);
+
+    // try generatating indices, throws on invalid movedElements
+    const elementsUpdates = generateIndices(elements, indicesGroups);
+    const elementsCandidates = elements.map((x) =>
+      elementsUpdates.has(x) ? { ...x, ...elementsUpdates.get(x) } : x,
+    );
+
+    // ensure next indices are valid before mutation, throws on invalid ones
+    validateFractionalIndices(
+      elementsCandidates,
+      // we don't autofix invalid bound text indices, hence don't include it in the validation
+      {
+        includeBoundTextValidation: false,
+        shouldThrow: true,
+        ignoreLogs: true,
+      },
+    );
+
+    // split mutation so we don't end up in an incosistent state
+    for (const [element, update] of elementsUpdates) {
+      mutateElement(element, update, false);
+    }
+  } catch (e) {
+    // fallback to default sync
+    syncInvalidIndices(elements);
+  }
+
+  return elements as OrderedExcalidrawElement[];
+}
+
+/**
+ * Synchronizes all invalid fractional indices with the array order by mutating passed elements.
+ *
+ * WARN: in edge cases it could modify the elements which were not moved, as it's impossible to guess the actually moved elements from the elements array itself.
+ */
+export function syncInvalidIndices(
+  elements: readonly ExcalidrawElement[],
+): OrderedExcalidrawElement[] {
+  const indicesGroups = getInvalidIndicesGroups(elements);
+  const elementsUpdates = generateIndices(elements, indicesGroups);
+  for (const [element, update] of elementsUpdates) {
+    mutateElement(element, update, false);
+  }
+
+  return elements as OrderedExcalidrawElement[];
+}
+
+/**
+ * Get contiguous groups of indices of passed moved elements.
+ *
+ * NOTE: First and last elements within the groups are indices of lower and upper bounds.
+ */
+function getMovedIndicesGroups(
+  elements: readonly ExcalidrawElement[],
+  movedElements: Map<string, ExcalidrawElement>,
+) {
+  const indicesGroups: number[][] = [];
+
+  let i = 0;
+
+  while (i < elements.length) {
+    if (movedElements.has(elements[i].id)) {
+      const indicesGroup = [i - 1, i]; // push the lower bound index as the first item
+
+      while (++i < elements.length) {
+        if (!movedElements.has(elements[i].id)) {
+          break;
+        }
+
+        indicesGroup.push(i);
+      }
+
+      indicesGroup.push(i); // push the upper bound index as the last item
+      indicesGroups.push(indicesGroup);
+    } else {
+      i++;
+    }
+  }
+
+  return indicesGroups;
+}
+
+/**
+ * Gets contiguous groups of all invalid indices automatically detected inside the elements array.
+ *
+ * WARN: First and last items within the groups do NOT have to be contiguous, those are the found lower and upper bounds!
+ */
+function getInvalidIndicesGroups(elements: readonly ExcalidrawElement[]) {
+  const indicesGroups: number[][] = [];
+
+  // once we find lowerBound / upperBound, it cannot be lower than that, so we cache it for better perf.
+  let lowerBound: ExcalidrawElement["index"] | undefined = undefined;
+  let upperBound: ExcalidrawElement["index"] | undefined = undefined;
+  let lowerBoundIndex: number = -1;
+  let upperBoundIndex: number = 0;
+
+  /** @returns maybe valid lowerBound */
+  const getLowerBound = (
+    index: number,
+  ): [ExcalidrawElement["index"] | undefined, number] => {
+    const lowerBound = elements[lowerBoundIndex]
+      ? elements[lowerBoundIndex].index
+      : undefined;
+
+    // we are already iterating left to right, therefore there is no need for additional looping
+    const candidate = elements[index - 1]?.index;
+
+    if (
+      (!lowerBound && candidate) || // first lowerBound
+      (lowerBound && candidate && candidate > lowerBound) // next lowerBound
+    ) {
+      // WARN: candidate's index could be higher or same as the current element's index
+      return [candidate, index - 1];
+    }
+
+    // cache hit! take the last lower bound
+    return [lowerBound, lowerBoundIndex];
+  };
+
+  /** @returns always valid upperBound */
+  const getUpperBound = (
+    index: number,
+  ): [ExcalidrawElement["index"] | undefined, number] => {
+    const upperBound = elements[upperBoundIndex]
+      ? elements[upperBoundIndex].index
+      : undefined;
+
+    // cache hit! don't let it find the upper bound again
+    if (upperBound && index < upperBoundIndex) {
+      return [upperBound, upperBoundIndex];
+    }
+
+    // set the current upperBoundIndex as the starting point
+    let i = upperBoundIndex;
+    while (++i < elements.length) {
+      const candidate = elements[i]?.index;
+
+      if (
+        (!upperBound && candidate) || // first upperBound
+        (upperBound && candidate && candidate > upperBound) // next upperBound
+      ) {
+        return [candidate, i];
+      }
+    }
+
+    // we reached the end, sky is the limit
+    return [undefined, i];
+  };
+
+  let i = 0;
+
+  while (i < elements.length) {
+    const current = elements[i].index;
+    [lowerBound, lowerBoundIndex] = getLowerBound(i);
+    [upperBound, upperBoundIndex] = getUpperBound(i);
+
+    if (!isValidFractionalIndex(current, lowerBound, upperBound)) {
+      // push the lower bound index as the first item
+      const indicesGroup = [lowerBoundIndex, i];
+
+      while (++i < elements.length) {
+        const current = elements[i].index;
+        const [nextLowerBound, nextLowerBoundIndex] = getLowerBound(i);
+        const [nextUpperBound, nextUpperBoundIndex] = getUpperBound(i);
+
+        if (isValidFractionalIndex(current, nextLowerBound, nextUpperBound)) {
+          break;
+        }
+
+        // assign bounds only for the moved elements
+        [lowerBound, lowerBoundIndex] = [nextLowerBound, nextLowerBoundIndex];
+        [upperBound, upperBoundIndex] = [nextUpperBound, nextUpperBoundIndex];
+
+        indicesGroup.push(i);
+      }
+
+      // push the upper bound index as the last item
+      indicesGroup.push(upperBoundIndex);
+      indicesGroups.push(indicesGroup);
+    } else {
+      i++;
+    }
+  }
+
+  return indicesGroups;
+}
+
+function isValidFractionalIndex(
+  index: ExcalidrawElement["index"] | undefined,
+  predecessor: ExcalidrawElement["index"] | undefined,
+  successor: ExcalidrawElement["index"] | undefined,
+) {
+  if (!index) {
+    return false;
+  }
+
+  if (predecessor && successor) {
+    return predecessor < index && index < successor;
+  }
+
+  if (!predecessor && successor) {
+    // first element
+    return index < successor;
+  }
+
+  if (predecessor && !successor) {
+    // last element
+    return predecessor < index;
+  }
+
+  // only element in the array
+  return !!index;
+}
+
+function generateIndices(
+  elements: readonly ExcalidrawElement[],
+  indicesGroups: number[][],
+) {
+  const elementsUpdates = new Map<
+    ExcalidrawElement,
+    { index: FractionalIndex }
+  >();
+
+  for (const indices of indicesGroups) {
+    const lowerBoundIndex = indices.shift()!;
+    const upperBoundIndex = indices.pop()!;
+
+    const fractionalIndices = generateNKeysBetween(
+      elements[lowerBoundIndex]?.index,
+      elements[upperBoundIndex]?.index,
+      indices.length,
+    ) as FractionalIndex[];
+
+    for (let i = 0; i < indices.length; i++) {
+      const element = elements[indices[i]];
+
+      elementsUpdates.set(element, {
+        index: fractionalIndices[i],
+      });
+    }
+  }
+
+  return elementsUpdates;
+}
+
+function isOrderedElement(
+  element: ExcalidrawElement,
+): element is OrderedExcalidrawElement {
+  // for now it's sufficient whether the index is there
+  // meaning, the element was already ordered in the past
+  // meaning, it is not a newly inserted element, not an unrestored element, etc.
+  // it does not have to mean that the index itself is valid
+  if (element.index) {
+    return true;
+  }
+
+  return false;
+}
diff --git a/packages/fractional-index/src/index.ts b/packages/fractional-index/src/index.ts
new file mode 100644
index 0000000000..249e4f1006
--- /dev/null
+++ b/packages/fractional-index/src/index.ts
@@ -0,0 +1,6 @@
+export {
+  validateFractionalIndices,
+  orderByFractionalIndex,
+  syncMovedIndices,
+  syncInvalidIndices,
+} from "./fractionalIndex";
diff --git a/packages/fractional-index/tsconfig.json b/packages/fractional-index/tsconfig.json
new file mode 100644
index 0000000000..5fb40d38ca
--- /dev/null
+++ b/packages/fractional-index/tsconfig.json
@@ -0,0 +1,19 @@
+{
+  "compilerOptions": {
+    "target": "ESNext",
+    "strict": true,
+    "outDir": "dist/types",
+    "skipLibCheck": true,
+    "declaration": true,
+    "emitDeclarationOnly": true,
+    "allowSyntheticDefaultImports": true,
+    "module": "ESNext",
+    "moduleResolution": "Node",
+  },
+  "exclude": [
+    "**/*.test.*",
+    "**/tests/*",
+    "types",
+    "dist",
+  ],
+}
diff --git a/scripts/buildShared.js b/scripts/buildShared.js
new file mode 100644
index 0000000000..2e4e179d96
--- /dev/null
+++ b/scripts/buildShared.js
@@ -0,0 +1,39 @@
+const fs = require("fs");
+const { build } = require("esbuild");
+
+const rawConfig = {
+  entryPoints: ["src/index.ts"],
+  bundle: true,
+  format: "esm",
+  metafile: true,
+  treeShaking: true,
+  external: ["*.scss"],
+};
+
+const createESMRawBuild = async () => {
+  // Development unminified build with source maps
+  const dev = await build({
+    ...rawConfig,
+    outdir: "dist/dev",
+    sourcemap: true,
+    define: {
+      "import.meta.env": JSON.stringify({ DEV: true }),
+    },
+  });
+
+  fs.writeFileSync("meta-dev.json", JSON.stringify(dev.metafile));
+
+  // production minified build without sourcemaps
+  const prod = await build({
+    ...rawConfig,
+    outdir: "dist/prod",
+    minify: true,
+    define: {
+      "import.meta.env": JSON.stringify({ PROD: true }),
+    },
+  });
+
+  fs.writeFileSync("meta-prod.json", JSON.stringify(prod.metafile));
+};
+
+createESMRawBuild();