I allow myself to insert this post by Devs here to keep the discussion tidy and clear to follow by the readers.
So, first about PVP, marking of PK, consequences, etc. It may seem like a trivial task, but in reality it is something that cannot really be solved 
Please read this article: https://www.gamasutra.com/blogs/RaphKoster/20180627/320893/A_brief_history_of_murder_in_Ultima_Online.php
It will give a good overview of why this is much more complex thing than it appears initially.
And now let me comment your reply.
I dont know the UO game. Never played it. But as described in linked article, the game mechanics of UO and CryofAll are quite different. And in my opinion, a logic mistake was born just in the deepest core of the judgmenet/punishment system introduced in UO.
First of all, there are many more "illegal" actions to make (like stealing from players, robbing NPC's, etc). Including PK (player killing). So, logically there should be a more complexed system of prevention (Laws). In my opinion their problem was in that they left the "justice" in the hands of players, supported by imperfect notification, but yet, it was players who did the justice.
So, killing neutral (innocent) player was a bad thing, but killing a criminal was a good thing (sure, in the name of justice). In some way the game allowed you to do PK with no conseqeunces. Or obbey the rules where possible.
In CryofAll you cannot steal anything from other player's inventory unless you kill him. No other way. So, there is only one crime - murder. And it should be punished, but not by the people (gamers) based on their judgement. This judgement should be done by the game itself. And so does my proposal. You introduce one basic rule -
PK is bad and will be ALWAYS punished. Period. Rest is the in game system. No people involved.
If you think my proposal over, u will notice that what i suggest will affect the player till the end of his game. Even friendly kill will not erase his "mental disorders" - like lifesentence. Of course the X counter will be unknown for player, so there will be no calculating (I still can execute one T2 player before my madness turns on). Lottery. You do bad things, you get bad things.
Breaking a base is not a crime in my opinion. Because player has an opportunity and means (stone walls, iron doors, etc) to prepare and protect his "safe house". It is his choice and his time management strategy what to do first in the game. And how much risk to take.
But killing other players just like that? NO!

With all the respect to CryofAll team - I just don't accept an argument "there will be no punishment for PK in our game because it never worked in other games". Try harder guys, it can be done! It is your game, your engine and your rules. In game rules.