I am making an RPG with a lot of quests but most of them are either neutral (available for both factions) or just some military base fighting against or spying on the other faction in some way. There is magic and space travel, so there can be powerful artifacts that are sought after by both factions or something like that, but it feels like that gets old very fast.

It's also procedurally generated, so any long quest line that involves more than a few villages/bases/other points of interest is not possible.

I feel like having some powerful villain could be useful because then there is a goal in the game: to defeat that villain and rid the universe of his (or her) influence.

There are quests and dungeons in the game that have enemies such as a dark wizard or bandits in an abandoned mine. While that is fine gameplay-wise, it just is very disconnected story-wise. I mean, it kinda makes sense that there are a lot of separate stories in a vast universe, but it feels like there is no end goal for the player. The war is perpetual anyway by necessity because the planets and quests scale up to max level, so unless there is an expansion that adds a new story and new planets, there will no peace.

What do you think?

Having a goal is definitely better than not having a goal.

“Us vs them” is common enough, and dates back to antiquity. “Good vs Evil” is more emotional in a story, but fundamentally not that different.

In plenty of economic games, even massive ones like EVE Online, maintaining “us vs them” was sufficient for an entire gaming world, with merchant guilds and trading empires, and with pirates and combat for those who are so inclined.

Having an end goal versus being a sandbox is also a design choice. Sandbox games of open-ended, open-world games can run for years with players coming and going, with empires being build and destroyed within the world. If the mechanics themselves are fun and balanced an active player base can do quite a lot. Developer-created themed events and stories can further enhance a sandbox with few specific goals. Collect all the things, build the biggest/best/strongest, PvP competition, PvE competition, all of them can be explored without developer-directed storylines.