I regularly rant about how much I hate the magic item treadmill in fantasy RPGs. In a MMO that is going to last years you really can't avoid it but in a tabletop game it feels terrible to me to have the game designed around constant acquisition and sale of magic items. I am running a Pathfinder game right now and I built the campaign world such that normal magic item progression is impossible so I had to come up with ideas to make things work. The two major troubles with not having magic items:
Monster balance is all out of whack. - This hardly matters to me since I custom build all the enemies.
Weapon user vs. spell user balance is wrecked. - Weapon users don't do nearly enough damage and lack magic items to replicate spell abilities. Spell users get very small bonuses to their efficacy from magic items but weapon users are *massively* reliant on them.
Here is what I did to have magic items be a thing and make it work:
1. The characters discovered that magic necklaces with a variety of powers were being manufactured in secret by an enemy government. They tracked down a shipment of those necklaces, fought the guards escorting them, and took them.
2. Once the enemy government was deposed the characters discovered a secret stash of magical weapons that had been created but never used by the old regime. The weapons were made of gold but astoundingly light and had strange runes that granted them powers against The Beasts.
3. The characters visited a land full of gigantic trees that stretched kilometers high which supported all the people of the land. In the top of one of the trees was a place sacred to those people that had berries which could grant +5 to a single stat. Eating such a berry would permanently change the colour of the person's hair and eyes depending on the stat in question. Str = Red, Dex = Orange, Con = Yellow, Int = Blue, Wis = Purple, Cha = Gold.
4. Upon leaving the land of trees the people there gave the characters spikes from their trees that grew very rarely. If the spike was shoved into the person's body they would gain +4 natural armour but the spike would remain sticking out of them forever, not causing damage but being extremely weird and potentially uncomfortable. All of the characters chose to impale themselves on the spikes to gain their benefits - they chose different places and ways in which to impale themselves, which was interesting thematically.
Basically the characters remember every item they got, where they got it, and why it is special. I think it is working, although my system obviously is impossible to generalize and standardize. If the system weren't so explicitly designed around magic item progression it wouldn't be such an issue but it is; I look forward to using Heroes By Trade so I can stop worrying about that.