This has been said multiple times while answering questions, but the death feature isn't implemented yet. I still have a lot of testing to do with it. I do want death to be real. I want you to never have your pokemon faint. I know its going to happen, but I want the way people play pokemon to change. If all of your pokemon die, you will be left with ghosts in your party. The pokemon centers will hand out free basic pokemon, and each center will offer a different one based on the pokemon around the area.
Your pokemon are never deleted. Instead, they are turned into a ghost species. This ghost species can be buried in the pokemon tower and you will receive something for it. I have yet to think about what exactly you will get.
Yes, if all of your pokemon die, it will be a terrible thing, but it will be your fault for not being prepared. You will need to know the typing of the gym before you enter. You will need to make sure you have the appropriate team, and you need to understand you can't faceroll it.
This isn't X and Y, and I want to make that clear. This isn't a Gamefreak game anymore, and its not meant for people who just want to breeze through the game. I want it to be challenging, with real risks and rewards.
I am making sure the player has ample chances to receive free potions, and to make sure they have everything they need to survive if they play correctly.