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It's completely intended, and there are lore reasons for it (this extends to Loot as well for the record).
will it ever be possible to implement a setting for world not to reset and repopulate loot?
after all putting an alter down stops it, so ther should be some setting that can be adjusted to do it for a larger area to the whole world.
devs may not want it but mod the game at your own risk
yes. this needs alot of rework or its just exploitable to all hell.
The devs have already commented on that: They want this to be a coop experience and since they did not put in personalized loot they said "Just let everything respawn so eventually every player will have enough items".
And then they said they want to look into adding more world settings.
I don't see it being very exploitable as loot is locked to the level of the area you are in. Worst case a player who could already be moving into the next biome keeps repeating the same duneons again and again, leveling slower and slower while not getting loot that fits their character level.
On the other hand if you could find an easily accessible spot in an area that is way over your level you might be able to find and use a high level weapon within multiple runs but as far as I can see the hand crafted world design of this game does not allow this, it would be more problematic in a randomly generated world.
The bigger problem I have with this setting is the implications for the story: We are meant to set out and remove the shroud from the world. But we may never do so as everytime we log back in anything we have done outside our flame altar range is undone. But that's something we might see changed in later stages of EA.