(Tested at poison pool for both charm and no charm.
Regular enemies that would normally be posture broken and vulnerable to a deathblow after a single mikiri counter will instead recover. Enemy vitality and posture is increased.You now receive chip damage (tested to be roughly 30%) when blocking attacks, effectively changing your play style, requiring you to deflect perfectly.When you speak to Kuro in the tower at the start of the game, you have the option of giving it to him, resulting in an indefinite "hard mode" difficulty debuff, similar to ringing the Demon Bell:.Most noticeably, blocking attacks now causes Sekiro to take chip damage unless he perfectly deflects, and there is a general increase in difficulty, but Exp and Sen rewards from enemies is increased by 20%. Returning the charm to Kuro at the start of the game unlocks "the path of further hardships", increasing the difficulty. This item is used in New Game Plus (as well as New Game, providing the player has finished the game and entered New Game Plus at least once) as a protection against chip damage from blocking. Kuro's Charm is a Key Item in Sekiro: Shadows Die Twice.
To part with it would mean facing a path of hardship beyond that endured thus far. The charm has protected the Wolf well, tempering his ordeals. Placed on the Wolf's person in secret, after he lost his life in Hirata Estate and gained the power of Resurrection.