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Copied from this duplicated idea:
Update Jan 2023: This seems to be a duplicate of the below existing idea. Please continue voting on that, rejecting this duplicate.
Thank you for providing this feedback. Yes, currently DEV extensions are not persisting across sandbox upgrades.
There is work in 2023 RW 1 which will move DEV extensions to tenant data, which should allow retaining them across sandbox upgrades, but it might require more work.
Thus for now marking this idea as under review.