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We developed an Entity DBMS where the entities are FSMs.

https://medium.com/@paul_42036/entity-workflows-for-event-dr...

I believe that FSMs are a very powerful approach, even for building entire systems. So much so, that it forms a core part of our product.

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Yes, FSMs are underestimated in imperative programming. Of course this is probably because before type-safe state machines were available, manual coding was very error-prone.

I've seen them a lot in embedded programming, but I can't be sure if that observation holds in general or just for the environment in which I was working when I did embedded.

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