The previous project/folder-style sidebar provided strong visual hierarchy: projects were clearly separated containers, and their chats were visually grouped underneath them. The current design places project labels next to chat names, which makes the sidebar increasingly difficult to scan when a user has many projects.
For users managing many long-running projects, the previous hierarchy was significantly more valuable for recognition and navigation. Please consider restoring the folder-style visual grouping, or providing an option to switch between the current compact view and the previous project-oriented view.