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(Idea has evolved, please check second post for revised version.)

This idea comes from one of my favorite RPG's of all time, Lufia 2, but is obviously modified in a way so that it could work for an MMO.

I'm not sure how hard something like this would be to implement, but I imagine a lot of people would have a ton of fun with this.

"Cave of Wonders" or "Eternal Dungeon" are some names that come to mind, but basically here's how it would work:  At some point later in the game there would be a zone that harbors an ancient tribe that guards a dungeon, and after building enough faction with them, they will sell you a temporary passage rite to enter their dungeon.  The dungeon would be designed for a group (maybe this can be scaled for raiding too, that would be great) and upon entering, everybody would start off with zero equipment or items.  There are 4 tiers of loot for this dungeon, which can be found in chests or drop from mini bosses/names/trash/etc and they are all EXCLUSIVE to ONLY this dungeon except the T4 artifacts (not gear, a collectible item), meaning they cannot be used anywhere else in the game.  Tier 1 loot is generally going to be lower end armor/items (scales based on the floor you loot them from)that disappear when your passage rite is over, which is basically when your group "wipes."  Tier 2 loot would be considered above average gear, but it becomes soulbound to your character while still remaining exclusive to this dungeon.

This means when your group dies and you are removed from the zone, the T2 loot is added to your "Cave of Wonders Exclusive Loot" whereas when you reenter the zone, you'll start with that piece of gear every time.  Tier 3 loot has the same restrictions and advantages as T2, but rather than being "above average" the item would be more like Best in Slot.  Again, once you leave the dungeon, you don't bring any of this stuff with you.  T2 and T3 loot are soulbound to your character and are equippable any time you return to the dungeon, but never outside of it.  Tier 4 loot are the rarest of all, a collection of 20 artifacts that when completed, you are awarded with some sort of treasure haul from the tribe that could be used anywhere in the game.  This could be a combination of an awesome mount, plat, rare spell, or some sort of cool trinket.  Whatever, make it epic, because this quest should be extremely difficult to complete.  You may even be able to make these tradeable, but they can only be redeemed as a full set.

Now that we know how the loot would work, let's talk a little more about the dungeon itself.  The dungeon has 100 floors.  Every time you pay your passage rite (this could be a huge plat sink if one is needed) you gain a 1 time entry into the dungeon.  You always start off with zero gear/items, unless you have looted T2-T3 loot in previous dungeon runs in which case you would start off with those items, giving you an instant boost to your ability to progress deeper into the dungeon.  The mobs would scale in difficulty, getting harder and harder the deeper you go.  Once you get to level 20 or so the difficulty of the dungeon becomes noticeably harder.  Eventually it becomes so difficult that it's almost impossible to advance unless your group is fairly decked out with T2-T3 loot, and in the deeper levels (around 50-60) even a decked out group may have a hard time advancing to the next floor.  The encounters should get so hard that there is a very real chance that if you run into the wrong type of mob, your group is going to wipe.  A level 60 fire dragon for example ... better hope your tank has a T3 fire resist item or 2 or it's insta death.

Once you get to level 100, you unlock a special instance for the final boss that has a 1 week lockout once it's killed.  This allows the devs to tune the encounter to be appropriately hard but still give the players a chance to actually have a chance to learn it.  Making it all the way to floor 100 just to fight the super mega boss that will inevitably kill you obviously wouldn't work because of how extreme the death penalty is inside the dungeon.  I'm not going to delve too much into this part because I'm sure the devs could have plenty of fun planning how the encounter would work and what type of reward would be given to those who can fell this legendary beast.  It should be an epic achievement and the reward(s) could be used in the regular world.

Every floor would be completely random every time you enter the dungeon.  There is no linear path to find the exit on each floor.  There are tons of corridors, doors, rooms, traps, fake chests, fake exits (real exits are a portal, fake exits look the same but instead of advancing you to the next floor of the dungeon, you get ported to a different location on the same floor.)  Each floor varies in size, whether or not chests (or mini bosses, names) would be present, and how many lurking monsters there are.  You could even change the dungeon art/music every 20-25 levels where it starts to get considerably harder, providing both an audio and video sense of progression as you delve deeper and deeper into the dungeon.  (Can add more dungeon levels with expansions to keep the zone relevant)

I think abilities like stealth, mezz, charm, traps, etc, could be very important.  Each floor isn't going to be a matter of just killing everything.  Many times it would be smarter to avoid a fight if possible, but this gets increasingly harder the deeper you go.  Mobs would have bigger LoS range, faster movement speed, etc.

I could see something like this being insanely fun and with high replay value.  People are going to want to acquire as much T2-T3 loot as possible to be better equipped to survive the deeper levels, and all T4 loot would have a pretty good value as well.  People could save up for their own collection of 20, or sell individual pieces off on the auction house, donate to guild, etc.  But the T4 stuff needs to be super rare.  Anybody who is able to get their hands on all 20 artifacts should have a really awesome reward in their hands and probably a title to go with it.

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Here is a more fleshed out (non-instanced) version that has been modified for an MMO:

Gauntlet of Diffusion  --  (GoD)
Design Goals:
Create a challenging dungeon crawl experience centered around high replay value and dynamic combat.
Utilize long-term, GoD exclusive vertical progression as an opportunity for players to unlock purposely limited yet tangible progression for characters that complete the dungeon.
Recycle existing game assets in order to achieve maximum content value with minimal design effort.
Create an effective gold-sink that can help with staving off inflation.
Allow hardcore players an avenue to invest high playtime without contributing toward any significant gap in power between them and the larger player base.
Create an epic dungeon experience that allows players an opportunity to affect temporary change into the world.
Create a leaderboard that allows competitive players to ascend a ranked ladder that doesn't contribute toward the idea of competition for resources in the game world.
Dungeon could be expanded upon with future expansions.
Dungeon Design:
The dungeon would consist of 7 wings that share a single, expansive floor plan.
Each wing would contain it's own audio/video elements that grow progressively more foreboding.
Each wing would contain a different pool of NPC's and itemization to randomly draw from, scaling in difficulty/quality.
The difficulty scaling for each wing would include more atmospheres, environmental effects, or traps not seen in priors wings.
As you progress through each wing, more dispositions would be added to the NPC pool.
Movement speed, aggro ranges, and detection methods would fluctuate depending on NPC type.
To expand on the above, think of drakes that can cover long distances in short periods of time, beholders that can see through invis, or wolves that can detect you from an increased range.
Every NPC serves as a place-holder for lottery spawns, meaning that every respawn has a very small chance to spawn as a named.
The final room for each wing would contain a teleportation device that can only be activated by defeating a force-spawned gate-keeper.
Dungeon Rules:
An admission fee must be paid by each player prior to entering the dungeon.
Upon entering the dungeon, each player would be outfitted in starter gear.  (They retain their level.)
If a group wipes, they are removed from the dungeon and have to restart at the entrance on their next run.
Players can attune themselves to teleportation devices, allowing them to save their progress, exit the dungeon, and pick up where they left off when they return.
In order to attune to a teleportation device, players must conquer the unique gate-keeper associated with it.
T2 chests have a chance to drop a "Providence" item.  These can be used to summon a player to a teleportation device that they have previously attuned to, consuming the item in the process.
The dungeon utilizes a unique progression model for itemization.  (Explained in next section.)
Itemization Progression Model:
Loot would be divided into five colored tiers.
T1 (Red Chests)  --  T1 loot would include gear and consumables ranging in quality from poor to average.  T1 loot is considered temporary and will disappear from player inventories if they wipe and fail the dungeon.
T2 (Green Chests)  --  T2 loot would include gear and consumables that are higher quality than what can be found in red chests, ranging from good to great.  T2 loot is considered temporary and will disappear from player inventories if they wipe and fail the dungeon.  (The only exception to this rule is the "Providence" item which would not disappear.  It is consumed upon use, though.)
T3 (Blue Chests)  --  T3 loot would include gear that ranges in quality from good to great.  T3 loot is considered soulbound to GoD.  T3 loot cannot be taken with you outside of the dungeon, but will return to your inventory when players re-enter the zone in the future.
T4 (Purple Chests)  --  T4 loot would include gear with an excellent quality score.  T4 loot is considered soulbound to GoD.  T4 loot cannot be taken with you outside of the dungeon, but will return to your inventory when players re-enter the zone in the future.
T5 (Gold Chests)  --  T5 loot would include tradeable collection items.  T5 collectibles are the only items that can be taken out of GoD.  There is a collection merchant outside of the dungeon that is willing to trade a prestigious item for a full set of these items.  (It's possible to create multiple "sets" of these collection items with each set qualifying for a different prestigious item.  These prestigious items would be cosmetic or utility in nature and could include mounts, cloaks, illusions, pet illusions, and house items.  )Could also include weight reduction bags, special quivers, summoning stones, etc.)
Final Thoughts:
Itemization would ideally be balanced around a "situational gear" ideology.  All the way up to T4, the ceiling for any individual piece of loot would be situational.
In order for the above to be true, a wide variety of combat situations would need to be present in the dungeon, ranging from atmosphere, environment, and resistance.
To further expand on the above, a variety of NPC dispositions and behaviors should contribute toward the value of long-term diagonal progression within the dungeon.
Lottery spawns would always drop at least 1 piece of T3-T4 gear, and have an increased chance of dropping a T5 collectible item.
In addition to the above, lottery spawns would drop a single teleportation rune.
X amount of teleportation runes can be consumed to summon a gate-keeper in the final room of each wing.  These runes would be tiered for each wing.
Item quality would not necessitate "ilevel" or "gearscore" implementation.  A human being would determine what loot belongs in each tier.
You could limit the availability of this dungeon by gating it behind faction or using it as a "dynamic event" that utilizes various world triggers that can open/close it.
The 7'th wing would contain a wise sage in the final room that offers to teach adventurers a powerful spell or ability.
Rather than a teleportation device, the final room of the 7'th wing would contain a summoning portal.
In order to activate the summoning portal, players would need to consume a full set of teleportation runes from each wing.  (7 sets total.)
Activating the summoning portal would call forth an epic raid boss, tuned for a raid that is completely outfitted in T4 gear.
Defeating the final boss would affect temporary change into the world of Terminus.
The final boss could have it's own unique set of prestigious items.  (The only vertical progression associated with this dungeon is a single spell or ability acquired from the Wise Sage.)

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