Very interesting concept - I like the idea of losing/gaining new abilities/skills alongside your health and it could work well in more of a roguelike style game. If you were to take it further, it would be pretty cool if perhaps instead of losing abilities as you lose health, maybe you could gain some as well, so you can avoid the whole domino effect where losing one health/abilities makes the game harder.
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I thought about creating a rogue lite from this. I haven't thought about taking it further though!
I really like your idea of giving the player other abilities instead of making them lose the ones they have.
Maybe it will be about life and death and the borders between. Each item could have 2 abilities (One when the ability is alive and one where it's dead) The dead abilities should be stronger so the player can easily escape the dominoes, but doesn't necessarily want to.