I was a pretty ruthless DM back in the days when I played D&D, and yet everyone always wanted to play my games because, challenging and a bit silly at times, they were always the best (probably because I was so good at writing a narrative). "The DM Giveth, the DM Taketh Away" was my motto...I'd have instant/unavoidable death traps that were rather easy to fall into, and yet I also was pretty generous with loot dispersal. Allow me to give an example of both.
Deep within a cave the party I was DMing for once found an ancient hidden temple. The insides of the temple were still mostly intact and bathed in a golden light that seemed to come from nowhere. At the heart of the temple was a Goblet of Immortality. All one had to do was drink from it to gain unending life. And it worked! The first player took a sip from the completely unguarded goblet and was promptly turned undead. The golden light that filled the temple was sanctifying energy that reduced any undead caught within it to a pile of ash. >:3
Now for an example of my generouosity, when defeating a boss or finding a very well hidden treasure, there was a chance that Lil Flubber Blubbs could appear. LFB was a cute baby harp seal covered in white fur and was just absolutely adorable...and utterly indestructible. Any attack levied against it is returned by a magnitude of 5. But LFB is never there to fight, he's quite docile, actually, and loves giving out presents! Go up and rub his belly and roll your dice, see what happens! Oh look! He caughed up a legendary "Sword of Infinite Awesomeness!" Or even better: "Shield of Yo' Momma!" Along with amazing stats that I forgot since it's been so long, it also makes you immune to Yo' Momma insults!