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Two of the things that always bother me eventually when playing RPGs are how preposterously wealthy my character becomes and how much loot just piles up.
Both of those problems stem from the game spawning so much stuff de novo.
indeed, essentially there needs to be an item sink right? I've tried to allow for this with item durability and maintenance requirements along with death mechanics where you lose everything you don't have equipped, but you just made me recognize how our life on earth is limited and that in itself may be the most important restriction to put in place... limit the lifetime/mana of each character so they're encouraged to do the most efficient things, maybe let them buy another life to keep progress or access a new frontier and second life lol
Item durability is the another important aspect. Stuff breaking is what keeps blacksmiths in business.
Fixed supply with infinite resources means hoarding wins and money velocity drops to zero. To fix this and the loot-pile problem, don't just destroy items via durability. Recycle their base materials back into the global world pool. A true closed-loop simulation forces trade.
Can you make everything in the game have a fixed supply, or at least be constrained by what can be built from materials in world?