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Ah yes, the good ol' anti-growth MMO business model.

Really though, i can't see this working. Several years back i used to play on a Minecraft server that banned you for a week if you died, and while it did add a lot of tension to the game, the map was absolutely massive. You could quite easily avoid every other player if you wanted too, which made it possible to actually get to a point where you felt relatively safe. A game with a (likely) considerably smaller world + permanent bans? No thanks.