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Wasted has a destructible environment, which works in a similar way to how Battlefield 3's destruction 2.0 mechanic works. Basically, when an explosion causes blocks to be destroyed, blocks above those blocks will fall, and can destroy a single block below them as they fall. This is why you see large buildings with holes through the floor all the way down.
If one of these blocks lands within ~1 block of a player, that player will take 5 hearts of damage from the impact, meaning falling buildings can kill players very quickly.
It is important to note that unlike other game modes, such as SMASH and Wasted:Control, ground is not self-regenerating. Ground that is destroyed stays destroyed until either an Engineer uses his Destruction Catalyst (right-click rather than left-click, repairs blocks in approx 8x8 area. Confirmation needed) or the game ends and the map resets.