This is really a rough draft after a 10 minute thought process, but in time I may improve on it with help from the comment section.. :-)

So, here we go:

The Fallen (a.k.a. the sneaky pacifistic - yeah right - bad guys) are the remnants of a very old race, whose original name was lost millennia ago. 

After their homeworld was destroyed by a coalition of races for their savage use of forbidden technology, the survivors vowed never to repeat the same mistakes.

Hence, they have lost a lot of their old knowledge and have turned their eyes toward a new method of conquest.

Instead of attacking their foes directly, they have devised ways through mind-altering technologies to have others do their dirty work for them.

Whilst seemingly befriending as many other races as possible to enhance trade and relations, they use their spies and technology to secretly subvert

enemy populations and fleets and sow rebellions among the stars. Their true goal: revenge for their homeworld and woe to all who stand in their way..

Faction affinity:

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- Use of diplomacy to subvert enemy populations and fleets and change them to your side

Faction specs:

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- Very small fleets

- Excellent diplomats

- Oceanbound (high penalties for other planet types)

- Extreme penalties when declaring war, but happiness bonus when other races declare war among themselves

The Fallen look like a very distant bipedal cousin of our terrestrial squids . They are overtly pacifistic but secretly yearning for conquest. The best way to build them up is to expand early on and explore, find other races which you can then influence (there could be a new metric implemented here design-wise like the conquest meter for sieges) and steal their colonies and fleets that are in your borders (or possibly target colonies through the diplomacy screen). They have weakened fleets, and thus are not exactly militaristic, but they have extra psychological weapons/abilities they can use in combat. Oh, and this just came to me: they're slightly telepathic.

I hope you like the idea. In any case, good luck to everyone and cheers for the great concepts floating around! :-D