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I know that Hardcore Mode increases the XP gain, but does it increase the quality of items and pets gained during the match?

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Patch 7.20 on PC changed the reward behavior on PC:

Hardcore Mode is now accessible on all Challenges, and gives better reward items (on Campaign and Challenges) than non-Hardcore

This means pets gained in survival, or items gained as reward for beating a boss/challenge with hardcore mode enabled will yield better stats than a regular game.

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