What game are you playing?
I think you mentioned this in a BO4 thread and needing to use a curve to correct the Y axis movement (I don't think you can do that in a curve, it affects both X and Y axis equally).
The firmware update does nothing to mouse aim or movement (unless enabling SAB, SA or Boost, which affect both axes), there's something else at play here.
Smoothing isn't needed for any DPI if you don't experience jitter. But that has nothing to do with Y-axis losing sensitivity.
Double-check your game and mouse settings. YX ratio in Xim Manager should also correct the issue.
It could also be your mouse dying, do you have another to test?