diff --git a/apps/android/app/src/main/java/chat/simplex/app/model/ChatModel.kt b/apps/android/app/src/main/java/chat/simplex/app/model/ChatModel.kt
index 124da977c..e3d10e1ad 100644
--- a/apps/android/app/src/main/java/chat/simplex/app/model/ChatModel.kt
+++ b/apps/android/app/src/main/java/chat/simplex/app/model/ChatModel.kt
@@ -496,6 +496,14 @@ data class Chat (
       else -> false
     }
 
+  val userIsObserver: Boolean get() = when(chatInfo) {
+    is ChatInfo.Group -> {
+      val m = chatInfo.groupInfo.membership
+      m.memberActive && m.memberRole == GroupMemberRole.Observer
+    }
+    else -> false
+  }
+
   val id: String get() = chatInfo.id
 
   @Serializable
@@ -942,7 +950,7 @@ data class GroupMember (
   fun canChangeRoleTo(groupInfo: GroupInfo): List<GroupMemberRole>? =
     if (!canBeRemoved(groupInfo)) null
     else groupInfo.membership.memberRole.let { userRole ->
-      GroupMemberRole.values().filter { it <= userRole }
+      GroupMemberRole.values().filter { it <= userRole && it != GroupMemberRole.Observer }
     }
 
   val memberIncognito = memberProfile.profileId != memberContactProfileId
diff --git a/apps/android/app/src/main/java/chat/simplex/app/views/TerminalView.kt b/apps/android/app/src/main/java/chat/simplex/app/views/TerminalView.kt
index 2222d50a8..8641b4a08 100644
--- a/apps/android/app/src/main/java/chat/simplex/app/views/TerminalView.kt
+++ b/apps/android/app/src/main/java/chat/simplex/app/views/TerminalView.kt
@@ -83,6 +83,7 @@ fun TerminalLayout(
             liveMessageAlertShown = SharedPreference(get = { false }, set = {}),
             needToAllowVoiceToContact = false,
             allowedVoiceByPrefs = false,
+            userIsObserver = false,
             userCanSend = true,
             allowVoiceToContact = {},
             sendMessage = sendCommand,
diff --git a/apps/android/app/src/main/java/chat/simplex/app/views/chat/ComposeView.kt b/apps/android/app/src/main/java/chat/simplex/app/views/chat/ComposeView.kt
index b4ea1ec0f..7d0ebe38c 100644
--- a/apps/android/app/src/main/java/chat/simplex/app/views/chat/ComposeView.kt
+++ b/apps/android/app/src/main/java/chat/simplex/app/views/chat/ComposeView.kt
@@ -648,6 +648,7 @@ fun ComposeView(
   }
 
   val userCanSend = rememberUpdatedState(chat.userCanSend)
+  val userIsObserver = rememberUpdatedState(chat.userIsObserver)
 
   Column {
     contextItemView()
@@ -744,6 +745,7 @@ fun ComposeView(
         needToAllowVoiceToContact,
         allowedVoiceByPrefs,
         allowVoiceToContact = ::allowVoiceToContact,
+        userIsObserver = userIsObserver.value,
         userCanSend = userCanSend.value,
         sendMessage = {
           sendMessage()
diff --git a/apps/android/app/src/main/java/chat/simplex/app/views/chat/SendMsgView.kt b/apps/android/app/src/main/java/chat/simplex/app/views/chat/SendMsgView.kt
index 01bebb0ad..d213296a3 100644
--- a/apps/android/app/src/main/java/chat/simplex/app/views/chat/SendMsgView.kt
+++ b/apps/android/app/src/main/java/chat/simplex/app/views/chat/SendMsgView.kt
@@ -60,6 +60,7 @@ fun SendMsgView(
   liveMessageAlertShown: SharedPreference<Boolean>,
   needToAllowVoiceToContact: Boolean,
   allowedVoiceByPrefs: Boolean,
+  userIsObserver: Boolean,
   userCanSend: Boolean,
   allowVoiceToContact: () -> Unit,
   sendMessage: () -> Unit,
@@ -75,7 +76,7 @@ fun SendMsgView(
     val showVoiceButton = cs.message.isEmpty() && showVoiceRecordIcon && !composeState.value.editing &&
         cs.liveMessage == null && (cs.preview is ComposePreview.NoPreview || recState.value is RecordingState.Started)
     val showDeleteTextButton = rememberSaveable { mutableStateOf(false) }
-    NativeKeyboard(composeState, textStyle, showDeleteTextButton, userCanSend, onMessageChange)
+    NativeKeyboard(composeState, textStyle, showDeleteTextButton, userIsObserver, onMessageChange)
     // Disable clicks on text field
     if (cs.preview is ComposePreview.VoicePreview || !userCanSend) {
       Box(Modifier
@@ -182,7 +183,7 @@ private fun NativeKeyboard(
   composeState: MutableState<ComposeState>,
   textStyle: MutableState<TextStyle>,
   showDeleteTextButton: MutableState<Boolean>,
-  userCanSend: Boolean,
+  userIsObserver: Boolean,
   onMessageChange: (String) -> Unit
 ) {
   val cs = composeState.value
@@ -262,16 +263,23 @@ private fun NativeKeyboard(
     }
     showDeleteTextButton.value = it.lineCount >= 4
   }
-  if (composeState.value.preview is ComposePreview.VoicePreview || !userCanSend) {
-    Text(
-      if (composeState.value.preview is ComposePreview.VoicePreview) generalGetString(R.string.voice_message_send_text) else generalGetString(R.string.you_are_observer),
-      Modifier.padding(padding),
-      color = HighOrLowlight,
-      style = textStyle.value.copy(fontStyle = FontStyle.Italic)
-    )
+  if (composeState.value.preview is ComposePreview.VoicePreview) {
+    ComposeOverlay(R.string.voice_message_send_text, textStyle, padding)
+  } else if (userIsObserver) {
+    ComposeOverlay(R.string.you_are_observer, textStyle, padding)
   }
 }
 
+@Composable
+private fun ComposeOverlay(textId: Int, textStyle: MutableState<TextStyle>, padding: PaddingValues) {
+  Text(
+    generalGetString(textId),
+    Modifier.padding(padding),
+    color = HighOrLowlight,
+    style = textStyle.value.copy(fontStyle = FontStyle.Italic)
+  )
+}
+
 @Composable
 private fun BoxScope.DeleteTextButton(composeState: MutableState<ComposeState>) {
   IconButton(
@@ -581,6 +589,7 @@ fun PreviewSendMsgView() {
       liveMessageAlertShown = SharedPreference(get = { true }, set = { }),
       needToAllowVoiceToContact = false,
       allowedVoiceByPrefs = true,
+      userIsObserver = false,
       userCanSend = true,
       allowVoiceToContact = {},
       sendMessage = {},
@@ -610,6 +619,7 @@ fun PreviewSendMsgViewEditing() {
       liveMessageAlertShown = SharedPreference(get = { true }, set = { }),
       needToAllowVoiceToContact = false,
       allowedVoiceByPrefs = true,
+      userIsObserver = false,
       userCanSend = true,
       allowVoiceToContact = {},
       sendMessage = {},
@@ -639,6 +649,7 @@ fun PreviewSendMsgViewInProgress() {
       liveMessageAlertShown = SharedPreference(get = { true }, set = { }),
       needToAllowVoiceToContact = false,
       allowedVoiceByPrefs = true,
+      userIsObserver = false,
       userCanSend = true,
       allowVoiceToContact = {},
       sendMessage = {},
diff --git a/apps/android/app/src/main/java/chat/simplex/app/views/chat/group/AddGroupMembersView.kt b/apps/android/app/src/main/java/chat/simplex/app/views/chat/group/AddGroupMembersView.kt
index 1ff21e665..753b2746b 100644
--- a/apps/android/app/src/main/java/chat/simplex/app/views/chat/group/AddGroupMembersView.kt
+++ b/apps/android/app/src/main/java/chat/simplex/app/views/chat/group/AddGroupMembersView.kt
@@ -166,7 +166,7 @@ private fun RoleSelectionRow(groupInfo: GroupInfo, selectedRole: MutableState<Gr
     verticalAlignment = Alignment.CenterVertically,
     horizontalArrangement = Arrangement.SpaceBetween
   ) {
-    val values = GroupMemberRole.values().filter { it <= groupInfo.membership.memberRole }.map { it to it.text }
+    val values = GroupMemberRole.values().filter { it <= groupInfo.membership.memberRole && it != GroupMemberRole.Observer }.map { it to it.text }
     ExposedDropDownSettingRow(
       generalGetString(R.string.new_member_role),
       values,
diff --git a/apps/android/app/src/main/java/chat/simplex/app/views/chat/group/GroupLinkView.kt b/apps/android/app/src/main/java/chat/simplex/app/views/chat/group/GroupLinkView.kt
index ab8e35a9c..1b20eb7a8 100644
--- a/apps/android/app/src/main/java/chat/simplex/app/views/chat/group/GroupLinkView.kt
+++ b/apps/android/app/src/main/java/chat/simplex/app/views/chat/group/GroupLinkView.kt
@@ -120,9 +120,9 @@ fun GroupLinkLayout(
       if (groupLink == null) {
         SimpleButton(stringResource(R.string.button_create_group_link), icon = Icons.Outlined.AddLink, disabled = creatingLink, click = createLink)
       } else {
-        SectionItemView(padding = PaddingValues(bottom = DEFAULT_PADDING)) {
-          RoleSelectionRow(groupInfo, groupLinkMemberRole)
-        }
+//        SectionItemView(padding = PaddingValues(bottom = DEFAULT_PADDING)) {
+//          RoleSelectionRow(groupInfo, groupLinkMemberRole)
+//        }
         var initialLaunch by remember { mutableStateOf(true) }
         LaunchedEffect(groupLinkMemberRole.value) {
           if (!initialLaunch) {
diff --git a/apps/ios/Shared/Model/ChatModel.swift b/apps/ios/Shared/Model/ChatModel.swift
index ac00f6268..adec3f54f 100644
--- a/apps/ios/Shared/Model/ChatModel.swift
+++ b/apps/ios/Shared/Model/ChatModel.swift
@@ -555,6 +555,15 @@ final class Chat: ObservableObject, Identifiable {
         }
     }
 
+    var userIsObserver: Bool {
+        switch chatInfo {
+        case let .group(groupInfo):
+            let m = groupInfo.membership
+            return m.memberActive && m.memberRole == .observer
+        default: return false
+        }
+    }
+
     var id: ChatId { get { chatInfo.id } }
 
     var viewId: String { get { "\(chatInfo.id) \(created.timeIntervalSince1970)" } }
diff --git a/apps/ios/Shared/Views/Chat/ComposeMessage/ComposeView.swift b/apps/ios/Shared/Views/Chat/ComposeMessage/ComposeView.swift
index d80402e15..6b3bb48ed 100644
--- a/apps/ios/Shared/Views/Chat/ComposeMessage/ComposeView.swift
+++ b/apps/ios/Shared/Views/Chat/ComposeMessage/ComposeView.swift
@@ -291,7 +291,7 @@ struct ComposeView: View {
                     .background(.background)
                     .disabled(!chat.userCanSend)
 
-                    if (!chat.userCanSend) {
+                    if chat.userIsObserver {
                         Text("you are observer")
                             .italic()
                             .foregroundColor(.secondary)
diff --git a/apps/ios/Shared/Views/Chat/Group/AddGroupMembersView.swift b/apps/ios/Shared/Views/Chat/Group/AddGroupMembersView.swift
index e2ce4fc64..613ae37b4 100644
--- a/apps/ios/Shared/Views/Chat/Group/AddGroupMembersView.swift
+++ b/apps/ios/Shared/Views/Chat/Group/AddGroupMembersView.swift
@@ -140,7 +140,7 @@ struct AddGroupMembersView: View {
     private func rolePicker() -> some View {
         Picker("New member role", selection: $selectedRole) {
             ForEach(GroupMemberRole.allCases) { role in
-                if role <= groupInfo.membership.memberRole {
+                if role <= groupInfo.membership.memberRole && role != .observer {
                     Text(role.text)
                 }
             }
diff --git a/apps/ios/Shared/Views/Chat/Group/GroupLinkView.swift b/apps/ios/Shared/Views/Chat/Group/GroupLinkView.swift
index aeef91212..0c4c1c839 100644
--- a/apps/ios/Shared/Views/Chat/Group/GroupLinkView.swift
+++ b/apps/ios/Shared/Views/Chat/Group/GroupLinkView.swift
@@ -34,15 +34,15 @@ struct GroupLinkView: View {
                 Text("You can share a link or a QR code - anybody will be able to join the group. You won't lose members of the group if you later delete it.")
                     .padding(.bottom)
                 if let groupLink = groupLink {
-                    HStack {
-                        Text("Initial role")
-                        Picker("Initial role", selection: $groupLinkMemberRole) {
-                            ForEach([GroupMemberRole.member, GroupMemberRole.observer]) { role in
-                                Text(role.text)
-                            }
-                        }
-                    }
-                    .frame(maxWidth: .infinity, alignment: .leading)
+//                    HStack {
+//                        Text("Initial role")
+//                        Picker("Initial role", selection: $groupLinkMemberRole) {
+//                            ForEach([GroupMemberRole.member, GroupMemberRole.observer]) { role in
+//                                Text(role.text)
+//                            }
+//                        }
+//                    }
+//                    .frame(maxWidth: .infinity, alignment: .leading)
                     QRCode(uri: groupLink)
                     HStack {
                         Button {
diff --git a/apps/ios/SimpleXChat/ChatTypes.swift b/apps/ios/SimpleXChat/ChatTypes.swift
index 71850a5ee..d88c4c581 100644
--- a/apps/ios/SimpleXChat/ChatTypes.swift
+++ b/apps/ios/SimpleXChat/ChatTypes.swift
@@ -1517,7 +1517,7 @@ public struct GroupMember: Identifiable, Decodable {
     public func canChangeRoleTo(groupInfo: GroupInfo) -> [GroupMemberRole]? {
         if !canBeRemoved(groupInfo: groupInfo) { return nil }
         let userRole = groupInfo.membership.memberRole
-        return GroupMemberRole.allCases.filter { $0 <= userRole }
+        return GroupMemberRole.allCases.filter { $0 <= userRole && $0 != .observer }
     }
 
     public var memberIncognito: Bool {
diff --git a/package.yaml b/package.yaml
index cacaf09a5..cd9a258f8 100644
--- a/package.yaml
+++ b/package.yaml
@@ -1,5 +1,5 @@
 name: simplex-chat
-version: 4.5.3.1
+version: 4.5.4.2
 #synopsis:
 #description:
 homepage: https://github.com/simplex-chat/simplex-chat#readme
diff --git a/simplex-chat.cabal b/simplex-chat.cabal
index 94b035af2..f25ff03e6 100644
--- a/simplex-chat.cabal
+++ b/simplex-chat.cabal
@@ -5,7 +5,7 @@ cabal-version: 1.12
 -- see: https://github.com/sol/hpack
 
 name:           simplex-chat
-version:        4.5.3.1
+version:        4.5.4.2
 category:       Web, System, Services, Cryptography
 homepage:       https://github.com/simplex-chat/simplex-chat#readme
 author:         simplex.chat
diff --git a/src/Simplex/Chat.hs b/src/Simplex/Chat.hs
index e8c0790bc..d3044b267 100644
--- a/src/Simplex/Chat.hs
+++ b/src/Simplex/Chat.hs
@@ -3439,9 +3439,9 @@ processAgentMessageConn user@User {userId} corrId agentConnId agentMessage = do
       messageError $ eventName <> ": wrong call state " <> T.pack (show $ callStateTag callState)
 
     mergeContacts :: Contact -> Contact -> m ()
-    mergeContacts to from = do
-      withStore' $ \db -> mergeContactRecords db userId to from
-      toView $ CRContactsMerged user to from
+    mergeContacts c1 c2 = do
+      withStore' $ \db -> mergeContactRecords db userId c1 c2
+      toView $ CRContactsMerged user c1 c2
 
     saveConnInfo :: Connection -> ConnInfo -> m ()
     saveConnInfo activeConn connInfo = do
diff --git a/src/Simplex/Chat/Store.hs b/src/Simplex/Chat/Store.hs
index 7669816dc..492dc0ad1 100644
--- a/src/Simplex/Chat/Store.hs
+++ b/src/Simplex/Chat/Store.hs
@@ -1622,8 +1622,17 @@ matchSentProbe db user@User {userId} _from@Contact {contactId} (Probe probe) = d
     cId : _ -> eitherToMaybe <$> runExceptT (getContact db user cId)
 
 mergeContactRecords :: DB.Connection -> UserId -> Contact -> Contact -> IO ()
-mergeContactRecords db userId Contact {contactId = toContactId} Contact {contactId = fromContactId, localDisplayName} = do
+mergeContactRecords db userId ct1 ct2 = do
+  let (toCt, fromCt) = toFromContacts ct1 ct2
+      Contact {contactId = toContactId} = toCt
+      Contact {contactId = fromContactId, localDisplayName} = fromCt
   currentTs <- getCurrentTime
+  -- TODO next query fixes incorrect unused contacts deletion; consider more thorough fix
+  when (contactDirect toCt && not (contactUsed toCt)) $
+    DB.execute
+      db
+      "UPDATE contacts SET contact_used = 1, updated_at = ? WHERE user_id = ? AND contact_id = ?"
+      (currentTs, userId, toContactId)
   DB.execute
     db
     "UPDATE connections SET contact_id = ?, updated_at = ? WHERE contact_id = ? AND user_id = ?"
@@ -1659,6 +1668,17 @@ mergeContactRecords db userId Contact {contactId = toContactId} Contact {contact
   deleteContactProfile_ db userId fromContactId
   DB.execute db "DELETE FROM contacts WHERE contact_id = ? AND user_id = ?" (fromContactId, userId)
   DB.execute db "DELETE FROM display_names WHERE local_display_name = ? AND user_id = ?" (localDisplayName, userId)
+  where
+    toFromContacts :: Contact -> Contact -> (Contact, Contact)
+    toFromContacts c1 c2
+      | d1 && not d2 = (c1, c2)
+      | d2 && not d1 = (c2, c1)
+      | ctCreatedAt c1 <= ctCreatedAt c2 = (c1, c2)
+      | otherwise = (c2, c1)
+      where
+        d1 = directOrUsed c1
+        d2 = directOrUsed c2
+        ctCreatedAt Contact {createdAt} = createdAt
 
 getConnectionEntity :: DB.Connection -> User -> AgentConnId -> ExceptT StoreError IO ConnectionEntity
 getConnectionEntity db user@User {userId, userContactId} agentConnId = do
diff --git a/src/Simplex/Chat/Types.hs b/src/Simplex/Chat/Types.hs
index 6c475b24f..5140ca7f7 100644
--- a/src/Simplex/Chat/Types.hs
+++ b/src/Simplex/Chat/Types.hs
@@ -159,9 +159,12 @@ contactConnId = aConnId . contactConn
 contactConnIncognito :: Contact -> Bool
 contactConnIncognito = connIncognito . contactConn
 
+contactDirect :: Contact -> Bool
+contactDirect Contact {activeConn = Connection {connLevel, viaGroupLink}} = connLevel == 0 && not viaGroupLink
+
 directOrUsed :: Contact -> Bool
-directOrUsed Contact {contactUsed, activeConn = Connection {connLevel, viaGroupLink}} =
-  (connLevel == 0 && not viaGroupLink) || contactUsed
+directOrUsed ct@Contact {contactUsed} =
+  contactDirect ct || contactUsed
 
 anyDirectOrUsed :: Contact -> Bool
 anyDirectOrUsed Contact {contactUsed, activeConn = Connection {connLevel}} = connLevel == 0 || contactUsed
diff --git a/tests/ChatTests/Groups.hs b/tests/ChatTests/Groups.hs
index 5b9048a62..a6b180266 100644
--- a/tests/ChatTests/Groups.hs
+++ b/tests/ChatTests/Groups.hs
@@ -47,6 +47,7 @@ chatGroupTests = do
     it "unused host contact is deleted after all groups with it are deleted" testGroupLinkUnusedHostContactDeleted
     it "leaving groups with unused host contacts deletes incognito profiles" testGroupLinkIncognitoUnusedHostContactsDeleted
     it "group link member role" testGroupLinkMemberRole
+    it "leaving and deleting the group joined via link should NOT delete previously existing direct contacts" testGroupLinkLeaveDelete
 
 testGroup :: HasCallStack => SpecWith FilePath
 testGroup = versionTestMatrix3 runTestGroup
@@ -1916,3 +1917,72 @@ testGroupLinkMemberRole =
       concurrently_
         (alice <# "#team bob> hey now")
         (cath <# "#team bob> hey now")
+
+testGroupLinkLeaveDelete :: HasCallStack => FilePath -> IO ()
+testGroupLinkLeaveDelete =
+  testChat3 aliceProfile bobProfile cathProfile $
+    \alice bob cath -> do
+      connectUsers alice bob
+      connectUsers cath bob
+      alice ##> "/g team"
+      alice <## "group #team is created"
+      alice <## "to add members use /a team <name> or /create link #team"
+      alice ##> "/create link #team"
+      gLink <- getGroupLink alice "team" GRMember True
+      bob ##> ("/c " <> gLink)
+      bob <## "connection request sent!"
+      alice <## "bob_1 (Bob): accepting request to join group #team..."
+      concurrentlyN_
+        [ alice
+            <### [ "bob_1 (Bob): contact is connected",
+                   "contact bob_1 is merged into bob",
+                   "use @bob <message> to send messages",
+                   EndsWith "invited to group #team via your group link",
+                   EndsWith "joined the group"
+                 ],
+          bob
+            <### [ "alice_1 (Alice): contact is connected",
+                   "contact alice_1 is merged into alice",
+                   "use @alice <message> to send messages",
+                   "#team: you joined the group"
+                 ]
+        ]
+      cath ##> ("/c " <> gLink)
+      cath <## "connection request sent!"
+      alice <## "cath (Catherine): accepting request to join group #team..."
+      concurrentlyN_
+        [ alice
+            <### [ "cath (Catherine): contact is connected",
+                   "cath invited to group #team via your group link",
+                   "#team: cath joined the group"
+                 ],
+          cath
+            <### [ "alice (Alice): contact is connected",
+                   "#team: you joined the group",
+                   "#team: member bob_1 (Bob) is connected",
+                   "contact bob_1 is merged into bob",
+                   "use @bob <message> to send messages"
+                 ],
+          bob
+            <### [ "#team: alice added cath_1 (Catherine) to the group (connecting...)",
+                   "#team: new member cath_1 is connected",
+                   "contact cath_1 is merged into cath",
+                   "use @cath <message> to send messages"
+                 ]
+        ]
+      bob ##> "/l team"
+      concurrentlyN_
+        [ do
+            bob <## "#team: you left the group"
+            bob <## "use /d #team to delete the group",
+          alice <## "#team: bob left the group",
+          cath <## "#team: bob left the group"
+        ]
+      bob ##> "/contacts"
+      bob <## "alice (Alice)"
+      bob <## "cath (Catherine)"
+      bob ##> "/d #team"
+      bob <## "#team: you deleted the group"
+      bob ##> "/contacts"
+      bob <## "alice (Alice)"
+      bob <## "cath (Catherine)"