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Two separate systems decide how hard you hit, and mixing them up is the #1 source of confusion. Here's the plain-language version.
These are percentage boosts to EXP, Meso Rate, Drop Rate, All Stats, Overpower, Total Damage, Boss Damage, and Ignore Enemy Defense. Five sources all simply add together into one total:
Your Total Level decides how high that combined total is allowed to go before it hits a hard ceiling - a higher total level unlocks a higher ceiling, up to a shared maximum once you pass total level 10,000:
Stacking a Totem, a DP buff, a Ring, and a burning instance together doesn't multiply your bonus the way it used to - each one now just adds its own fixed share of your base %, so the more you stack, the less extra each additional one is worth. You still always come out ahead stacking more, just not exponentially.
Normal and Kaotic Dojo let you pick which one of 7 of these stats (all except Ignore Enemy Defense) each clear's % bonus goes toward. That target is capped to keep one stat from running away while the rest sit untouched:
None of the 7 can be pushed past 2x your own live average across all 7 - so if your average across them is 12,500%, none can be boosted past 25,000% until the average itself rises. A clear that would push your chosen stat over that line isn't wasted though - the bonus is automatically redirected onto whichever of the 7 is currently your lowest instead, so grinding one target eventually drags the others up too.
Once your % bonuses are added up and capped (section 1), here's specifically what each one does to your real damage output:
This is the real math the server runs (same numbers @op shows you, unlocks at total level 250+):
Step 1 - Total Stat Power (varies by class):
Step 2 - Base Overpower = Total Stat Power × (1 + Overpower% ÷ 100)
Step 3 - your actual hit:
Step 4 - whichever of those two numbers applies gets clipped down to your Damage Cap if it's higher (see section 3 below). Ignore Enemy Defense doesn't appear in this chain directly - it instead reduces how much of the target's own DEF stat subtracts from your damage before this formula even runs.
Completely separate from the % stats above. This is a hard ceiling on the actual damage number any single hit can ever deal - your maximum possible hit, full stop. It has two parts: a base amount from your Total Level, and a bonus amount you farm by completing Monster Cards, Achievements and Quests, by buying it with Trial Points at the Trials shop, and from your Link Characters. Both add together, capped at 99,999Q total either way.
Base, by level bracket:
Bonus, by completion:
Check your own current cap (and full breakdown) any time with @damagecap in-game.
Your % stats (Total Damage, Boss Damage, All Stats, etc.) decide how big a hit calculates to be. Your Damage Cap decides the highest that number is ever allowed to actually land as.
In practice: more % Total/Boss Damage keeps helping right up until your calculated hit would exceed your Damage Cap. Past that point, your hits stop growing no matter how much more % you stack - only leveling up (which raises the cap itself) makes your maximum hit bigger from there.
See the full Player Commands list for exactly what each of these commands displays.