That looks like CCD bugging out, when it can’t entirely prevent tunneling it can freeze like that “stuck” in penetration (assuming you aren’t stabbing by accident that is), also a physx issue AFAIK, unknown if it will happen in chaos still as I still can’t run good tests against chaos until its working properly).
Handling the mass and setting the constraint coefficient on the grip settings (to 1 normally and adjusting stiffness to account for it) can remove that. Also making sure that the edge on the blade isn’t super thin.
I also have a setting to increase CCD steps in the project settings that I added, I normally suggest that people avoid using that as its possible to work around these issues by better balancing the physics settings on the object itself but in a few cases people have increased that to help.