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A sacrifice is a sort of trade. There are many things that can be sacrificed but most of the time a sacrifice involves killing someone. These sacrifices are done to satisfy the Gods and are sometimes done on an alter. By sacrificing something, the people doing the sacrifice assume that this higher power will be satisfied and not kill them. Sometimes, a sacrifice is done for better crops, a kingdom's prosperity or to quell the wrath of the Gods.
Sacrificing can also be done by the player. By doing this, he can get an upgrade like more health.