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Provider recommendations are all depending on your geographic location. Search up for reputable host providers that have been around for a while hosting other co-op games. Then look through their site to see if they have the option of a server located closer to you or your friends. This will reduce latency (lag) and give a better experience than connecting to something thousands of miles away.
Alternatively, if you have a good computer and basic knowledge, or an extra capable computer kicking around, you can set up your own dedicated server at home and save the monthly cost
Download separate Enshrouded Dedicated Server executable from the 'Tools' section of your Steam library.
Instead of clicking the 'Launch' button, right-click the Enshrouded Dedicated Server from the tools list and select 'Properties'.
Select the 'Installed Files' tab and click 'Browse' to open the executable's folder and then launch the enshrouded_server application.
After launching enshrouded_server once, it will create a file called 'enshrouded_server.json' in the same folder, and this file can then be opened with any text editor to configure your dedicated server.
Once you've completed the steps above, open 'enshrouded_server.json' with your text editor of choice (we went with the simple Notepad) and write the following in each line of text between the quotation marks:
Name - "Insert the name of your server here".
Password - "Insert your server's password here".
saveDirectory - "Insert the name of the folder you wish to save your world on" (this is optional, as it's set as './savegame' by default).
logDirectory - "Insert the name of the folder you wish to use for storing log-files" (this is also optional, as it's set as './logs' by default).
Ip - "Insert your IPv4 address".
gamePort - "Can change to match your firewall settings".
queryPort - "Can change to match your firewall settings".
slotCount - "Insert the maximum players you want on your server" (pick a number between one and 16).
To get your IPv4, open the Command Prompt and enter 'ipconfig', then copy and paste it into the 'enshrouded_server.json' document. Keep the 'gamePort' and 'queryPort' numbers as default, unless you need to change for firewall reasons.
Firewall
The next step is ensuring other players can join your server by playing on the same local network (LAN) as you. It's important to note that this is very much dependent on your firewall software and choice of router, so we can't give dedicated instructions for everyone. Instead, we recommend looking up a guide for your specific firewall software and router.
Port forward
You also need to port forward to get a dedicated server to work in Enshrouded. Again, the exact instructions for doing this depends on your specific router
lifted from eurogamer
Edit: to be clear i don't reccommend hosting a dedicated server on the same computer you are playing on, unless you run a beast of rig like mine. That being said, I certainly used to do it on my previous potato with various levels of success depending on the game and number of players.