Ruined Items makes most chest and loot weapons and accessories have a 'ruined' prefix that heavily nerfs their stats. This prefix may be removed with reforging, but at some expense. Magitech Scrap items can also be used to attempt to repair ruined items (1/3 chance), but only once per item.

Items may also be locked instead of nerfed, by configuration. Other configuration options available.

https://forums.terraria.org/index.php?threads/ruined-items.102433/