diff --git a/ucp/_libs/ucx_api.pyx b/ucp/_libs/ucx_api.pyx
index c8f896774..860e45f39 100644
--- a/ucp/_libs/ucx_api.pyx
+++ b/ucp/_libs/ucx_api.pyx
@@ -189,7 +189,7 @@ cdef class UCXContext(UCXObject):
         ucp_context_h _handle
         dict _config
 
-    def __init__(self, config_dict):
+    def __init__(self, config_dict, blocking_progress_mode=False):
         cdef ucp_params_t ucp_params
         cdef ucp_worker_params_t worker_params
         cdef ucs_status_t status
@@ -199,11 +199,17 @@ cdef class UCXContext(UCXObject):
                                  UCP_PARAM_FIELD_REQUEST_SIZE |  # noqa
                                  UCP_PARAM_FIELD_REQUEST_INIT)
 
-        # We always request UCP_FEATURE_WAKEUP even when in blocking mode
-        # See <https://github.com/rapidsai/ucx-py/pull/377>
-        ucp_params.features = (UCP_FEATURE_TAG |  # noqa
-                               UCP_FEATURE_WAKEUP |  # noqa
-                               UCP_FEATURE_STREAM)
+        # We only enable UCP_FEATURE_WAKEUP on blocking mode. This is
+        # required for shared memory, which is currently only supported
+        # by non-blocking mode, and that doesn't implement UCP_FEATURE_WAKEUP.
+        # See <https://github.com/openucx/ucx/issues/5322>
+        if blocking_progress_mode is True:
+            ucp_params.features = (UCP_FEATURE_TAG |  # noqa
+                                   UCP_FEATURE_WAKEUP |  # noqa
+                                   UCP_FEATURE_STREAM)
+        else:
+            ucp_params.features = (UCP_FEATURE_TAG |  # noqa
+                                   UCP_FEATURE_STREAM)
 
         ucp_params.request_size = sizeof(ucx_py_request)
         ucp_params.request_init = (
diff --git a/ucp/core.py b/ucp/core.py
index e29c65c0a..1f0730190 100644
--- a/ucp/core.py
+++ b/ucp/core.py
@@ -229,10 +229,6 @@ class ApplicationContext:
     def __init__(self, config_dict={}, blocking_progress_mode=None):
         self.progress_tasks = []
 
-        # For now, a application context only has one worker
-        self.context = ucx_api.UCXContext(config_dict)
-        self.worker = ucx_api.UCXWorker(self.context)
-
         if blocking_progress_mode is not None:
             self.blocking_progress_mode = blocking_progress_mode
         elif "UCXPY_NON_BLOCKING_MODE" in os.environ:
@@ -240,6 +236,12 @@ def __init__(self, config_dict={}, blocking_progress_mode=None):
         else:
             self.blocking_progress_mode = True
 
+        # For now, a application context only has one worker
+        self.context = ucx_api.UCXContext(
+            config_dict, blocking_progress_mode=self.blocking_progress_mode
+        )
+        self.worker = ucx_api.UCXWorker(self.context)
+
         if self.blocking_progress_mode:
             self.epoll_fd = self.worker.init_blocking_progress_mode()
             weakref.finalize(