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The Daily Grind: The consequence of PvP

PvP has been an important part of the MMO genre right from the start, but it hasn't stayed the same in any way. The earliest implementation in Ultima Online made PvP completely non-consensual and wholly one-sided: you could be killed at any time, and the victor gets to take everything on your person with impunity.

At this point, the "default" standard is closer to World of Warcraft, in which the victor is rewarded, the loser inconvenienced at worst, and no real lasting damage is done. Of course, there are players who prefer the older style, where PvP has lasting consequences, and games such as Darkfall are specifically designed to cater to the older style. But there are PvP focused games such as Warhammer Online which stilll follow the low-impact model, with goodies for the winner but no huge penalty to the defeated.

So what are your thoughts on the gradual erosion of high-stakes PvP from the mainstream? Is it a good way to keep more casual players from being annhilated needlessly, or does it remove too much of the game's excitement and unpredictability? What do you think is a fair penalty for getting killed, if indeed there is one?