diff --git a/caddyconfig/caddyfile/formatter.go b/caddyconfig/caddyfile/formatter.go
index bf70d117..2c97f3b0 100644
--- a/caddyconfig/caddyfile/formatter.go
+++ b/caddyconfig/caddyfile/formatter.go
@@ -39,6 +39,7 @@ func Format(input []byte) []byte {
 
 		openBrace        bool // whether current word/token is or started with open curly brace
 		openBraceWritten bool // if openBrace, whether that brace was written or not
+		openBraceSpace   bool // whether there was a non-newline space before open brace
 
 		newLines int // count of newlines consumed
 
@@ -145,10 +146,11 @@ func Format(input []byte) []byte {
 			openBrace = false
 			if beginningOfLine {
 				indent()
-			} else {
+			} else if !openBraceSpace {
 				write(' ')
 			}
 			write('{')
+			openBraceWritten = true
 			nextLine()
 			newLines = 0
 			nesting++
@@ -158,6 +160,10 @@ func Format(input []byte) []byte {
 		case ch == '{':
 			openBrace = true
 			openBraceWritten = false
+			openBraceSpace = spacePrior && !beginningOfLine
+			if openBraceSpace {
+				write(' ')
+			}
 			continue
 
 		case ch == '}' && (spacePrior || !openBrace):
@@ -183,7 +189,7 @@ func Format(input []byte) []byte {
 		if beginningOfLine {
 			indent()
 		}
-		if nesting == 0 && last == '}' {
+		if nesting == 0 && last == '}' && beginningOfLine {
 			nextLine()
 			nextLine()
 		}
@@ -193,9 +199,6 @@ func Format(input []byte) []byte {
 		}
 
 		if openBrace && !openBraceWritten {
-			if !beginningOfLine {
-				write(' ')
-			}
 			write('{')
 			openBraceWritten = true
 		}
diff --git a/caddyconfig/caddyfile/formatter_test.go b/caddyconfig/caddyfile/formatter_test.go
index 8f2a0126..25bd7fa8 100644
--- a/caddyconfig/caddyfile/formatter_test.go
+++ b/caddyconfig/caddyfile/formatter_test.go
@@ -287,10 +287,24 @@ bar "{\"key\":34}"`,
 			expect:      `foo \"literal\"`,
 		},
 		{
-			description: "simple placeholders",
+			description: "simple placeholders as standalone tokens",
 			input:       `foo {bar}`,
 			expect:      `foo {bar}`,
 		},
+		{
+			description: "simple placeholders within tokens",
+			input:       `foo{bar} foo{bar}baz`,
+			expect:      `foo{bar} foo{bar}baz`,
+		},
+		{
+			description: "placeholders and malformed braces",
+			input:       `foo{bar} foo{ bar}baz`,
+			expect: `foo{bar} foo {
+	bar
+}
+
+baz`,
+		},
 	} {
 		// the formatter should output a trailing newline,
 		// even if the tests aren't written to expect that