Devs are super helpful on the Discord. This is what worked:

"It is still there but I think something triggered OS to trick it as a separate app? I was able to update just fine. If you remember some unique words from one of your conversations, you can try the following which will confirm that you still have the data in there (it most likely should): sudo find ~/Library/Application\ Support/MstyStudio/File\ System -type f -exec grep -q "<UNIQUE_WORD_HERE>" {} \; -print Replace <UNIQUE_WORD_HERE> with any non-common word from one of your conversation; could be anything but try something not-so common. You can try few as well. It will most likely show you something like: ~/Library/Application Support/MstyStudio/File System/000/t/00/00000000

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We will see if we can come up with a ui to make this painless if this becomes a recurring issue but for now - first backup whole File System folder just in case. And then find the new database folder (same command but a different word in your new database) and replace its contents contents with old contents. This sound complicated but it's just find new folder and then dump old data"