My 2 ideas for leveling in my new project I've been working on.

Option 1:

Weapons have levels that you can level up by killing enemies or spending currency and a shop of some sort. Leveling the weapon makes it more powerful. The weapon will also have a impurity score the will worsen the added damage you get from leveling up the weapon. This makes it a little more interesting rather than picking up the weapon that does the most damage maybe you want a weapon that does less damage but can be leveled up to do more in the long run. Levels would be capped at 10 or something.

Option 2:

The player has a level and it will effect how powerful weapons are.

Both can be used for armor too. If you have any suggestions feel free to comment!