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Basically, the higher that number is, the quicker that equip will break when you're hit. So if you wear a set of equips for long enough, that set will eventually become utterly useless and probably break in one boss hit every time.
So you might say, well that's dumb and yes, yes it is. But, theres a pretty simple solution to this
Go to Ferghus and go to Enhancement
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Everytime an equip is enhanced, it resets the deterioration points back to 0. Just like new. No need to recraft or rebuy that item or have to deal with it breaking every time a kobold shoots a arrow at you.
As long as you dont +5 your equips right away you can use your set for a very long time. Just +1 them every now and then whenever you feel like your equips are too weak. Essentially you have 5 resets.
However, I'm not sure what happens when you try to enhance and it fails. If that resets the deterioration as well then that wouldn't be too bad