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Every benefit needs to have a cost attached to it to maintain balance. A good example would be a semi-sentient magic shield that gains defense bonuses if you tell it about all the badass monsters you've beaten, but if you lie to it, or it thinks you're a big baby it drops it's stats back to 0 and you have to start over. Gives the player lots of power, and you, the DM, lots of wiggle room. 'Sure, you can lie to the shield and say that you've totally beaten a chimera before, but if you fail your charisma roll, you lose all your bonuses.'I don't know how to give out armor or weapons without overpowering the whole party.
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