Experiance System is still the same just different way of losing it
I dunno if this has been done but.
You shouldn't lose level when losing experiance. You should lose 20% of the current level Experiance.
Throw out the losing stat points idea, its not a good one I believe. Make players lose a random none equipted item, like 1 item for lower levels and 2 or 3 items for higher levels.
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