After reading chapter 15 today, we learned that Vasher believes type 2 invested entities are a cognitive copy of the person's soul. It seems like the Fused and the Heralds are going insane due to Generation Loss, a cognitive copy is made from the copy, resulting in deterioration of the "soul" over time. Every time that a Herald or Fused dies, rather than being transported to Braize, their cognitive shadow is copied, discarded / dies, and the copy is placed on Braize. This would mean that the Fused, because they can come back immediately in every everstorm, would be experiencing an accelerated decline into insanity.