Clearly when playing on "The Pool" difficulty either my weapons do less damage or the enemies have more HP.

My question is on what difficulty level do the bots have zero HP or damage boosts, but maximum AI efficiency?

On Runner the damage and mitigation multipliers are 1, as well as the piloting (AI response time and decision making) multiplier. Anything above runner will have you dealing less damage and enemies dealing more damage, as well as improving their response times.

Would it be possible to add the option of upping the AI response time without giving it a damage multiplier in a future patch?

I want smarter opponents, just not cheating opponents.

Sure, probably won't be in the next patch, but I'll put it on my to do list.

I would also like a difficulty based more on the gameplay rather than the enemy stats, like to say, the enemies on lower difficults have lesser dangerous loadouts and fly on lower ranked ships than on higher difficults.

I hope you make it a little more robust set of options, then just a simple slider for ai response time.
Such as having "Custom" difficulty, where you can manually adjust each respective modifier where it applies the ai settings globally to that game/save.
Hp, damage, damage taken, speed, response time, aim, and whatever other ai stuff you currently use, should be adjustable.
(or at least have auto ajust so enemies minimum ship rank is at least yours (or you can manually set this too))

Edit1: btw, where can we see what settings are, for each difficulty?

I'll see what I can do, at most it would be modifying damage boosts and mitigations along with AI piloting skill. It would probably be restricted to single player games, and even then I would have to come up with a fair plex multiplier based on the settings. Still trying to decide the best way of doing it. I'll think about it some more when the MOBA mode of the game is complete.

As for looking at the specifics of each difficulty, the exact numbers can't be found in game. Basically enemies will deal more damage and receive less damage as you go up in difficulty. They will also have higher piloting skill. I could post the numbers if you would like.

Actually, increasing the enemy Hp (because decreasing your damage output is like extending the enemy health) and damage is probably the worst way to make a game more difficult (is callen "fake difficulty" for a reason).

I just spent one entire hour trying to complete the first outpost nine mission on "the pool" difficulty because beside having enemies that "don't die" and can "insta-kill" you even with a fully armored Strata Gunship they also regenerate both shields and hull if you don't dish enough damage constantly, and most of the times in the highest difficults that's a quite prohibitive thing to do considering that the game doesen't have a "pattern", the enemy ships are "randomized" (and for these two reasons you can't predict where those enemies are going to go nor what they are going to do) respawn endlessy and constantly (i checked the map and i was chased by 8 ships last time i retreated) and to go for the main objective without getting ganged by everything around you are forced to focus and kill a few of those "attackers" before, just to see them respawning over and over as soon as you kill them in a sort of "limbo" in which you can only try to kill swarmers instead of destroy the damn base shields and base itself that if you have somehow managed to damage is meanwhile regenerating because you're too busy trying to survive and shake off enemy fighters that won't die.

This way of making things harder is not fun, is tedious and frustrating because you can't progress but only kill more and more fighters in an endless loop while you try to reach the goal just to be forced back again.

Besides, this also forces you to play with very precise equipments because as i sayd if you don't deal enough damage constantly, the enemies also regenerate faster than you can damage them, and unless you equip something like a mercurial cannon or a gemini Gatling with damage and fire rate mods and "spam" it in the face of the enemy without taking it off, you won't do anything really useful ever, you can shoot a missile salvo that deals lot of damage but as soon as you shoot another and another waiting for the missiles to hit the target, the enemy ship is already regenerating all the damage you have dealt making the weapon pointless.

Right now i would really play the game with other ships too but seeing how everytime i try some that doesen't have a freign death/critical time loop with a machinegun like weapon doesen't feel good, it just makes me think "meh, why should i use this one then ?" and so i'm "forced" again to my usual ship with the same usual stuff because i can't do anything else, and not because i'm not good (at least i don't think to be bad if i got so far on "The Pool" difficulty and got all the singleplayer achievements on "Sage" difficulty) but simply because the game mechanic doesen't allow me to do differently.

I hope to don't sound too much critic with this comment but i like Ring Runner very much, i would actually get a necklace or the soundtrack too if i would have some spare cash, is just that the way this game "difficulty" is made makes me feel more frustrated than entertained: is certainly fun to battle smarter enemies with different and more powerful attacks and loadouts, but battling enemies that you can't kill or you can kill in one and only one way is not fun, is just frustrating.

Being a bit constructive, in the game there are so many classes of ships, archetypes, equipments... can't the difficulty be based on those rather than just increasing the enemy health and damage ?
Like on "easy" you find low class ships with weak loadouts, on "medium" you find better ships with better loadouts, and on "hard" you find the best ships with the most dangerous loadouts combinations a Solarian/Valoraphim/Centrian/whatever can think of ? How about just increasing the enemy speed or spawn rate without increasing theyr damage/health levels too (Old games like Gradius and R-Type spawn more enemies and more bullets on screen when you raise the difficulty) ?
I mean, there are so many and better ways to make a game more difficult than not just by increasing the enemy Health and damage.

We have tested several builds of every hull on The Union difficulty, while some ships do better than others on certain missions, all are viable at high difficulty. I agree that the way difficulty is done isn't perfect, no solution really is. Having lower ranked ships come at you would effectively be doing about the same thing, as they typically tank less and deal less damage. Spawning more enemies will start to impacting performance. As good as the AI is, it still needs to have a bit of an unfair advantage to challenge a very skilled player. It is likely to late to do a complete revamp of the difficulty system, as all missions have been designed with it in mind.

Definitely appreciate the feedback, like I said I will look into other possible ways of modifying difficulty once the MOBA mode is finished.

Actually if i can point to one particular issue i would like to adress the enemy regeneration.

Not dealing an high damage to the enemies wouldn't be much of an issue if they don't regenerate, it may certainly take more time to beat them and you may have to kite them for longer and stuff but at least there wouldn't be the problem of the "regen > Dps".
Being able to retreat and engage different enemies at same time is always been a quite important thing in shooters, and in the highest difficults of this game as soon as you disengage from an enemy to retreat and/or engage a different one, the previous mob has already regenerated most (if not all) of the damage points you have previousely dealt to it "undoing" all your efforts and the time you have spent battling with it, and just because you had no choice but to retreat in order to avoid being defeated.

The enemy regeneration adresses to this particular thing of the "time": In the highest difficults you need time to beat enemies that need so many hits to be destroyed, and if you are somehow "forced" to leave them and come back later just to find out they have healed all of theyr shields and hull points, you have lost your time, and this becomes a bigger issue in other modes like the "Spire Battle" or when you have to destroy a bigger target than a fighter since you have to deal even more damage because of your target being an enemy structure that needs way more hits before to be destroyed, so if you have to retreat or you're destroyed first, as soon as you come back you find out the structure has already healed itself making all of your work and time spent damaging it wasted.

Maybe i'm not a game designer but it would be much nice if it would be possible to have at least a fix on the enemy regeneration rate, or at least not making them regenerate the hull points.