The opposite extreme, of course, is unbridled power creep.
Sure, but you said there is no benefit without a penalty. That is an extreme position.
My goal is to make that number go down to (or below!) zero. Your goal is to prevent that happening.
Everything else is pretty much just gravy.
when I DM the goal is not for me to drop the hp number to zero. I want to challenge them, of course, that is part of the goal of running the game. However, challenging them is not the same as defeating them. And I don't see the value in approaching the game with the mindset of defeating the players. IF that's all I'm supposed to do, it is child's play.
Situation: party has beaten its way through to a treasure vault, in which is a chest. On opening the chest:
DM: You see six items in here: 1) a pair of dark-green boots; 2) a plain-looking gold ring; 3) a gleaming silver bar or rod about 2 feet long with no obvious markings; 4) a large and gently glowing orange gem; 5) a short length of silk rope, maybe 5 feet long; 6) a stoppered ceramic vial. All of these things look to be easily of high enough quality to be enchanted.
The DM's notes say the following about each item:
1) On donning boots, wearer and all worn or carried gear (incuding these boots!) instantly and permanently transforms into a large fir tree. Roots extend deep into the ground (regardless of ground material). Dexterity and movement speed become 0 and tree cannot become prone. Tree retains intelligence but cannot speak or otherwise physically communicate, though mental or psionic communication is possible. Chopping down or uprooting tree slays it; removing branches causes commensurate damage (etc. etc.)
2. On donning ring, wearer instantly gains a "hidden" wish: the next time the character speaks a sentence starting with the words "I wish" that wish will, as far as possible, come true. Once the wish is transferred (even if not yet used) the ring loses all enchantment and becomes a simple piece of jewelry worth 45 g.p.
3. Bearer gains best possible results when interacting, in a reasonable manner, with metallic Dragons. Has no effect or use otherwise.
4. On being touched to one's own forehead, gem immediately and permanently inserts itself there. Wearer gains at-will telepathic communication with any sentient creature that a) wearer has socially interacted with and b) is willing to receive such communication. If gem is removed from wearer's forehead by any means, wearer dies (no save).
5. While rope is being worn as a belt, wearer cannot be damaged by falling.
6. Vial contains a double-strength potion of healing; though all indications (smell, taste, etc.) point to it being a potion of giant strength.
Clearly here I either need some specific details as to exactly who does exactly what or there's going to potentially be some very big benefits and penalties getting tossed around by random DM fiat. So, details it is.
And, as I'm asking for details this time I need to ask for details every time so as to conceal those times when - like this - details are really important.
So, picking up none of these items is harmful. And basically any group I am running with has the Identify ritual ready to go to tell us all of this information. That's what Identify does. You can also identify what a magic item does during a short rest (we sometimes roll arcana).
Therefore the party will ditch the boots. They are utterly worthless and actively harmful. Maybe they keep them if they think they can use them as a deathtrap for someone they don't like.
The rod they keep in a backpack and probably forget about, unless there are metallic dragons they need to talk to.
The Gem is interesting. Someone is probably willing to take the risk, though we are going to ask how easy it is to remove. You personally won't tell us, but the asking is to measure the risk. If this ends up being "you die if hit with a critical hit" that is very different than "someone has to pin you, and forcibly rip it out of your skull" in terms of the risk associated with it.
Someone would then wear the rope. And they would probably end up saving the ring for a useful wish.
The vial is weird though. And leads me to my question... what's the point of some of this?
Why have a potion that seems like giant strength but is actually a decent healing potion? The healing is a fine reward, and this runs the risk of them drinking it at full health, expecting a strength boost and instead wasting it because they were full health. It seems like an item literally designed to be wasted because the players are being deceived. What is the actual goal with that?
The boots are even worse, if you don't allow identify or anyway to figure out what they do. Because a player who puts them on to find out what they do dies. And, acting with no knowledge and being forced to guess, while guessing can get you killed, isn't a fun game. You might as well roll a die everytime someone declares an action, and kill them on a 1, because that is the same amount of control the players have.
Maybe not this, but I frequently get "No, we'll examine it from back here and maybe toss a few Detect spells at it (and around the room) first."
I-as-DM can never assume what they'll do.
This doesn't surprise me given your list of magical items. Since looking at it could be an instant death sentence in your games.
Personally, I've found that since I don't arbitrarily kill PCs with no warning, they tend not to act like every single item they interact with could be instant death. And when it would be... I pretty much just tell them how deadly the item is. (And some of them still touch it, but I told them, so there aren't any hard feelings)