Mediumcore Mode

Medium-Core (name is likely subject to change) is a new option on new characters, which will be added in the 1.0.6 patch. It will sit somewhere in between Hardcore and Softcore. Seeing as the "Death Penalty" during the early stages of development was dropping all items in the inventory, that might be what happens when one dies on Medium-Core mode. Again, this is confirmed for 1.0.6, the date might be some time in August, based on Tiyuri's Reddit comment.