you could probably do it similar to that green area in the first one I remember losing a level through that or a mimic chest kind of thing
That was kind of a stub of me playing around with it, but I never really elaborated on it and ended up pulling that out. In order for it to be fun the lack of level would have to be noticeable when fighting enemies and so on. It is a fun idea though, so I might find a way to slip it in briefly in the future.
Really like level down thing in games, but yeah it's hard to implement it properly. Personally I think having specific events that use that mechanic and after you're done with them you get your levels back works well, but that can feel underwhelming to some people since level downs are not permanent. Maybe an option depending on if you loose or win decides if you get those levels back could work. Either way can't wait for what you come up with. The previous game became one of my favorite hypno games and I can't wait to eventually play this one when it's a bit more finished.