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Kayfabe covers both the fact that matches are scripted and that wrestlers portray characters for their shows.
Unlike actors who only portray their characters when on set or on stage, professional wrestlers often stay "in character" outside the shows, especially when interacting with fans, trying to preserve the illusion of professional wrestling.
Another term for "kayfabe" is the word "work", or "worked", which also refers to the staged nature of professional wrestling.
In contrast, something that is not "kayfabe" but legitimate, be it a fight or a statement, is referred to as a "shoot".
Faces usually win their matches on the basis of their technical skills and are sometimes portrayed as underdogs to enhance the story.Then one night, the guy decided to stand up for himself and told the whole dressing room: "I don't mind the yelling, but I want to let you know that my name is not Kayfabe. What he didn't know is that wrestlers called people outside of the business "marks"—that's why we were yelling kayfabe in the first place.The term "kayfabe" was often used as a warning to other wrestlers that someone who was not "in the know" was in the vicinity.Kayfabe is often seen as the suspension of disbelief that is used to create the non-wrestling aspects of promotions, such as feuds, angles, and gimmicks, in a manner similar to other forms of fictional entertainment.In relative terms, a wrestler breaking kayfabe during a show would be likened to an actor breaking character on-camera.
Per that theory, many US promoters and wrestlers at that time were of Eastern European origin and many had heavy accents, leading to the term being transformed into "kayfabe".