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Dmg is an abbreviation of the word Damage. It defines the overall damage that your weapons or attacks will do while equipped. Can be increased with materials at the customization bench next to the blacksmith.

The damage formula probably is:

       Final damage = base damage - armor (or resi for magical damage)

Note that the base damage depends on your weapon and skill used.

If you crit, the base damage is doubled.

       Final damage = base damage×2 - armor (or resi for magical damage)