Something I'd love is if humanity is replaced with sanity. Instead of gathering humanity or things that would grant you humanity, instead of having to be human to summon players and engage in PvP, all of that is dropped and sanity takes its place.
The more sane you are = you don't get invaded as often, enemies aren't as vicious when it comes to tracking and combat patterns, the environment becomes brighter, day time is more common and longer if there is a day/night cycle. You don't collect sanity, sanity will never be an item, its a state of mind based on how well the player is doing.
What causes low sanity? Getting killed constantly, running through areas instead of killing enemies in that area, failing at helping players in PvE.
What would low sanity do? Enemies attack the player more viciously, traps are hallucinations but cause the player to get damaged, ghosts and demons are seen, ghosts and demons attack the player. Nighttime will be longer, bosses begin to morph and change into more frightening things. Enemies start to look different, enemies attacks and patterns would change.
How do you gain sanity back? Beating area bosses, clearing areas of enemies, helping players in PvE.
Essentially: die a lot, suck at the game = the game gets even more hellish. Get good, the game starts to get less eerie and more fairy tale-ish.