diff --git a/core/armor_system.py b/core/armor_system.py
index c19101f..cf97cb5 100644
--- a/core/armor_system.py
+++ b/core/armor_system.py
@@ -199,12 +199,18 @@ class ArmorPiece:
     """
     Individual armor piece (e.g., Ghost Helmet, Shogun Harness).
     Each piece protects one slot and can have one plate attached.
+    
+    Loot 2.0 Mechanics (June 2017):
+    - Armor decay is LINEAR per damage point absorbed
+    - Base economy: 20 hp/pec (0.05 pec per hp)
+    - Armor only decays for damage it ACTUALLY absorbs (after plate)
+    - Plate absorbs FIRST, then armor takes remainder
     """
     name: str
     item_id: str
     slot: ArmorSlot
     set_name: Optional[str] = None  # e.g., "Ghost", "Shogun"
-    decay_per_hit: Decimal = Decimal("0.05")  # Decay in PEC when hit
+    decay_per_hp: Decimal = Decimal("0.05")  # Decay in PEC per HP absorbed (20 hp/pec standard)
     protection: ProtectionProfile = field(default_factory=ProtectionProfile)
     durability: int = 10000
     weight: Decimal = Decimal("1.0")  # Weight in kg
@@ -212,6 +218,9 @@ class ArmorPiece:
     # Optional plate attachment
     attached_plate: Optional[ArmorPlate] = None
     
+    # Loot 2.0: Economy standard is 20 hp/pec = 0.05 pec/hp
+    DEFAULT_ECONOMY: Decimal = Decimal("0.05")  # 20 hp per pec
+    
     def get_base_protection(self) -> ProtectionProfile:
         """Get base protection without plate."""
         return self.protection
@@ -226,13 +235,24 @@ class ArmorPiece:
         """Get total protection value including plate."""
         return self.get_total_protection().get_total()
     
-    def get_decay_for_hit(self, damage_after_plate: Decimal) -> Decimal:
+    def get_decay_for_damage(self, damage_absorbed: Decimal) -> Decimal:
         """
-        Calculate armor piece decay for taking damage.
-        Plate absorbs first, so damage_after_plate is what gets through.
+        Calculate armor decay for absorbing damage.
+        
+        Loot 2.0 Formula:
+        - Decay is LINEAR per damage point
+        - Armor only decays for damage it ACTUALLY absorbs
+        - Base: 20 hp/pec = 0.05 pec per hp absorbed
+        
+        Args:
+            damage_absorbed: Amount of damage the armor actually absorbed
+        
+        Returns:
+            Decay in PEC
         """
-        # Base decay plus small amount per damage point that hits armor
-        return self.decay_per_hit + (damage_after_plate * Decimal("0.001"))
+        if damage_absorbed <= 0:
+            return Decimal("0")
+        return damage_absorbed * self.decay_per_hp
     
     def attach_plate(self, plate: ArmorPlate) -> bool:
         """Attach a plate to this armor piece."""
@@ -265,7 +285,7 @@ class ArmorPiece:
             'item_id': self.item_id,
             'slot': self.slot.value,
             'set_name': self.set_name,
-            'decay_per_hit': str(self.decay_per_hit),
+            'decay_per_hp': str(self.decay_per_hp),
             'protection': self.protection.to_dict(),
             'durability': self.durability,
             'weight': str(self.weight),
@@ -280,7 +300,7 @@ class ArmorPiece:
             item_id=data['item_id'],
             slot=ArmorSlot(data['slot']),
             set_name=data.get('set_name'),
-            decay_per_hit=Decimal(data['decay_per_hit']),
+            decay_per_hp=Decimal(data.get('decay_per_hp', '0.05')),
             protection=ProtectionProfile.from_dict(data.get('protection', {})),
             durability=data.get('durability', 10000),
             weight=Decimal(data.get('weight', '1.0')),
@@ -328,12 +348,26 @@ class ArmorSet:
         return total
     
     def get_total_decay_per_hit(self) -> Decimal:
-        """Get total decay per hit across all pieces (including plates)."""
+        """
+        Get total decay per hit across all pieces (including plates).
+        Note: This is an ESTIMATE assuming average damage absorption.
+        Actual decay depends on how much damage each piece absorbs.
+        """
+        # This is a rough estimate - actual decay depends on damage absorbed
+        # Using a typical hit value of 10 hp for estimation
+        typical_hit = Decimal("10")
         total = Decimal("0")
+        
         for piece in self.pieces.values():
-            total += piece.decay_per_hit
+            # Estimate armor decay (assuming it absorbs typical hit up to its protection)
+            armor_absorb = min(typical_hit, piece.protection.get_total())
+            total += piece.get_decay_for_damage(armor_absorb)
+            
             if piece.attached_plate:
-                total += piece.attached_plate.decay_per_hit
+                # Estimate plate decay
+                plate_absorb = min(typical_hit, piece.attached_plate.get_total_protection())
+                total += piece.attached_plate.get_decay_for_damage(plate_absorb)
+        
         return total
     
     def get_pieces_list(self) -> List[ArmorPiece]: