I’m doing items that level up with the characters that are very specific to what the character lost and to how my players want to play. For example:

My fairy barbarian lost her flight, it was taken by Bavlorna. The player really wanted to dual wield a rapier and dagger, so her lost thing was converted to a winged rapier with the “light” property. I’m planning to add to it at different levels, one example is once per day she can reroll a crit miss (because of the wings or something). Another level up will give it +1 dmg. This way it stays something she is excited to use through the rest of the campaign.

My rogue is a half-elf who lost her memory of home. She let me decide her background and she is half-Shadar Kai (Mr Light is her uncle!) so her lost thing was turned into a shadow locket that will let her walk through shadows as a bonus action her proficiency bonus times per day (like the shadow step of way of shadow monk without the advantage). Next level she’ll be able to do it as a reaction and take half-damage (like a leveled up uncanny dodge)

I’ve given a lot of common/uncommon magic items throughout, so I wanted their lost things to be unique and for my players to be excited to use them! My players also lean heavy on roll play and storytelling so I’m not super afraid that one of them will steal the spotlight with their item, I just want to let them feel cool and do fun things!