Here's the digested version of the lengthy and mangled version below:
I understand Paragraph 188 as showing the initial result of the fight to the death between the two consciousnesses. The both have to differentiate themselves from life (objective reality), and as such they risk their lives in a struggle to the death:
"This trial by death, however, cancels both the truth which was to result from it, and therewith the certainty of self altogether. For just as life is the natural "position" of consciousness, independence without absolute negativity, so death is the natural "negation" of consciousness, negation without independence, which thus remains without the requisite significance of actual recognition."
So the result of the struggle turns out to be negation without independence, i.e. without an objective being distinct from the rest of life - and as both are killed off there can be no recognition. Death demonstrates that the two consciousnesses are distinguished from life - but for the two that experienced this struggle this isn't much use, as they've cancelled themselves out.
"Through death, doubtless, there has arisen the certainty that both did stake their life, and held it lightly both in their own case and in the case of the other; but that is not for those who underwent this struggle. They cancel their consciousness which had its place in this alien element of natural existence; in other words, they cancel themselves and are sublated as terms or extremes seeking to have existence on their own account. But along with this there vanishes from the play of change the essential moment, viz. that of breaking up into extremes with opposite characteristics; and the middle term collapses into a lifeless unity which is broken up into lifeless extremes, merely existent and not opposed. And the two do not mutually give and receive one another back from each other through consciousness; they let one another go quite indifferently, like things."
The flux of recognition between the two (in which both served as the middle term for the other in the process of recognising itself in the other) disapears, and we end up with a lifelesss unity in which both are dead, no longer consciousness - just things.
"Their act is abstract negation, not the negation characteristic of consciousness, which cancels in such a way that it preserves and maintains what is sublated, and thereby survives its being sublated."
So this negation has ended up in a dead-end (pardon the pun), and it is in that respect that this negation is not the negation characteristic of conscoiusness. It is itself a contradiction that consciousness needs to get past - and it does so in the lord and bondsman relationship, in which neither are allowed to die, and take on different roles in differentiating themselves from objective being. This is introduced in paragraph 189.