If your hair is long, then you simply cannot sleep with your hair loose. I have been braiding a braid for the night from the moment I started to grow my hair, a very long time ago (the length is below the tailbone). The main reason is that in the morning you still have the same braid, and not matted dreadlocks that need to be combed for a long time. The main thing is to braid not a tight, but a weak braid.
The hair will not become smaller, although it is definitely safer in a braid. I can advise a few life hacks: do not wash the lower part of the hair with shampoo, use only balms and oils on the ends, rinse your hair with cold water after shampooing and do not rub it heavily with a towel. Do not wear a towel on your head for a long time after a bath. Do not comb damp hair, if possible, refuse a hairdryer, curling iron and ironing.
From personal experience, I can say that I didn't feel much difference. However, braided stripes are more uncomfortable. And with the loose ones I get some kind of nonsense in the morning, as if I hadn't washed for three days.
P.S. shoulder-length hair.