Isn't it kinda overpowered?

I mean, it values for ANY attack?

If the opponent attacks with a power challenge, I lose a character

If he attacks again with intrigue, I lose another character

And if he attacks with military, I lose ANOTHER character? And probably one more since I'll prolly lose the military challenge?

And all at the opponent's choice? Isn't it really overpowered?

Deadly only works if the attacker has more deadly characters PARTICIPATING in the challenge. And the defender only loses one character who was PARTICIPATING in the challenge.

Exactly - if you are faced with a challenge with Deadly attackers you can:

1) Suck it up by throwing someone who you don't mind losing in as a participating defender.

2) Let it be unopposed

3) Present at least as many deadly defenders.

It is powerful, but no more powerful than Renown or Stealth, and isn't game breaking by any means.