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Life Stolen per hit returns life to the equipping player character, mercenary or pet based on a percentage of final physical attack damage applied: if a target takes no physical attack damage, no life is returned.
Percentages from multiple sources are summed, although when two weapons are equipped only that of the attacking weapon is added (that of the other weapon is ignored).
Not applied by Blade Sentinel or Smite. Does not work with skills which convert 100% physical attack damage to another type, for obvious reasons:
For player character and mercenary, life returned is reduced to 1/2 in Nightmare and 1/3 in Hell.
Unit damage modifier applies to percentage: against player character (17% damage), <6% is reduced to 0%, 6-11% is reduced to 1% and so on; for mercenary attacking Evils in Hell (25% damage), <4% is reduced to 0%, 4-7% is reduced to 1% and so on. [1][2]
Ranged skills which apply a fraction of weapon damage also apply that fraction to percentage:
Thus using Blade Fury with a two-handed weapon, <3% is reduced to 0%, 3-5% is reduced to 1%, and so on. [3][4]
Unit drain effectiveness also reduces life returned: no life is returned when attacking monsters with 0% drain effectiveness, regardless of final physical attack damage applied. When attacking a monster with 50% drain effectiveness in Hell, only life equivalent to ~1/6 (1/3 * 1/2) percentage of final physical attack damage is returned (reductions apply to life returned, not the percentage itself).
Life Tap is not affected by difficulty level penalties, unit damage modifiers, weapon damage fractions or drain effectiveness: it always returns life equivalent to 50% of final physical attack damage, even when using Smite.