Thanks for the question! When it comes to being defeated, you'll lose any currency on you and some items- likely about a third to a half of your bag, and you'll be kicked out of the locale. So story progress, level, skills, genes, etc will all stay with you (albeit you'll have to restart the locale from the beginning of course)- you'll just have to be careful with what you bring with you to difficult locales or be ready to escape through some of the mechanics coming in Chapter 2! (Penalties are still somewhat WIP, I've been thinking about if they should be different for the Classic (easier difficulty) and stuff like that), but mostly it's being built similarly to PMD/ChocoboMD if that helps ^vv^