Smashpedia
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Stale-Move Negation refers to moves causing less damage as they are used repeatedly.

Masahiro Sakurai added stale-move negation to the Super Smash Bros. series in order to encourage players to try different attacks out and use characters to their fullest instead of using an attack again. When a character uses an attack too many times, the damage and knockback goes down until it becomes less than half its original power. This is something to remember in the Home-Run contest, as some combos will get weaker and weaker. Using different attacks will reset the damage of the spammed attack at about the same rate it was cut, while being KO'd resets all a character's moves (with the exception of SSB64 where the spammed attack(s) are still affected by stale-move negation).

In Super Smash Bros. Brawl, the effect affects both damage and knockback for all moves. Stale-move negation does exist in the other 2 smash games, but it is much less recognizable outside of the Stale Moves bonus in melee (worth -2000) due to there being almost no reduction in power.

Testing to determine the stale-move negation effect in Brawl initially confused players, as the effect is not applied in Brawl's Training mode (the confusion stemming from the fact that is was applied in the training modes of SSB and SSBM). In fact it isn't applied in all the 1P modes in Brawl except in the Home-Run Contest.

In Brawl, Stale-Move Negation is calculated with the aid of a queue of the last ten moves a character has connected with. When a move is used that's in the queue, its damage is decreased an amount based on both how often the move is in the queue and how recently the move has been used. If a move is used ten times in a row, it will have lost 55% of its power in total. If a move is not in the list of ten most recently-used moves, it earns a freshness bonus of 1.05x damage - therefore, in Brawl, very few attacks ever deal the exact damage they are programmed to do.

Moves that are counter-attacks or absorbers do not take the stale-move negation of the incoming attack into consideration.

Items are also affected by SMN in the same way, even if you drop the item you're holding and pick up a different one of the same.

Moves that Stale-Move Negation does not affect

The following moves are not affected by stale-move negation:

In Brawl+, Stale Move Negation is non-existent. It was initially tried with lower levels than what is present in Brawl but in the end was removed completely. This meant that characters with limited kill options, such as Sonic and Captain Olimar, became better at landing KO's and that certain character's up-tilt moves, such as Kirby's and Fox's, could not be used repeatedly to rack up damage, due to the decreasing knockback Stale-Move Negation causes.

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