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Does player has to announce usage of elf ability before the encounter begins or can he decide to use it in the middle of the encounter?
From the creator:
Thanks for the question.
Per the rules sheet, Edaiyn's ability is announced at the beginning of an encounter. That's definitely how you'll get the most use of it.
But could you do it in the middle? I would allow it - but not as an immediate reaction to being hit. I would allow it to work for the round after it was announced.