I've seen many suggestions about morale for raiding, as in crew morale. I thought that something similar could be for combat.

1. Critical Offense + Critical Defense
We all know it happens and when. When we take less damage than the average on one attack, it's critical defense. If we deal more damage than average on one attack, it's critical offense. These will be the main supporters for combat morale.

2. Combat Morale
This will be a bar on the top of a combat screen consisting of blue and red, 50% each.
Ex: |==========O==========|
Blue side is your morale and red is the enemy's. When equal to each other, there are no modifications to damage rate.

If the blue side is greater than the red, your ship either takes less damage or deals more damage, randomly.
Ex: |===============O=====|

If the red side is greater than the blue, the enemy either deals more damage or takes less damage, randomly.
Ex: |=====O===============|

3. Critical Offense/Defense Support
When dealing a critical hit or critically defending, your morale bar increases, say for each critical offense/defense, your morale bar (blue) gains 1% and the other side loses 1%. Same happens with the enemy's morale.

4. Graphics Tweak
There could be some coding and graphics that when we deal a critical hit or we critically defend, maybe under the amount of damage we dealt/received, there could be an animated "Critical Offense!" "Critical Defense!" (respectively) that lasts no more than 2 seconds.

This could be for PvP and NPC, maybe Invasions, I'm not sure. This idea could be great, unbalanced, or game breaking. What do you think?

highly unbalancing / game breaking

What 1% towards either side for every critical hit? Not an awful lot.
Anyway my take on this is that it serves really no purpose. Why would I want 1%or whatever chance to take less damage, give out more damage especially when it works both ways. I'd rather just upgrade my attack and defense thank you.

he didnt say a % cap

but my point is more like , there are alot of players that dont pvp atm , and when they would start pvping alot of other people would have(random number) 50% extra crit chance , then it wil be VERY hard to catch up

I got the impression that this wasnt overall (i.e all your average carries over) but its for your fight vs that one person.

I like it - but i dont know how much it adds to the game. If dan could do it in a day and not interupt anything else, than my answer would be hell yeah just for something interesting and interactive to see