Make a backup in any case.
Firmware updates don't delete files, and they also - don't uninstall modifications / addons. (A factory reset would do that on both accounts, though.)
However, some addons modify original firmware files (as opposed to - adding new files) and each firmware update contains (almost) all original firmware files, so - changes to those files are inadvertently reverted when updating firmware.
So it's possible you have to reinstall an addon after firmware update, so original firmware files can be modified again. It would be possible to make an addon so that it automatically reinstalls itself...but I'm not sure if anyone does that.
Now, when reinstalling an addon, you actually have the same conundrum. The addon will re-overwrite original firmware files. However at the same time it could also re-overwrite its own files. This is why some of my addons have a "addonname.example.cfg" file (which will be overwritten when you reinstall) to be renamed by the user to "addonname.cfg" (which will be kept even if you reinstall).
So addons have to be constructed to on one hand overwrite firmware but on the other hand not to overwrite their own config files in the same process...
Ideally the developer of that addon has thought about it.
But if in doubt: make a backup in any case.
It's very easy to lose all files on a Kobo. If the original Kobo firmware so much thinks as anything is wrong, it will factory reset without waiting for your confirmation, without giving you any chance of getting your data off first. Anything to make the device work again, never mind your files. You're expected to have a copy of those in Calibre, Adobe, Kobo app or whatever you use to manage books.
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