From what I've read, there are two reasons to avoid leveraged etfs:
I might be wrong, but it seems that volatility drift is only a problem if you invest 100% of your money in leveraged etf's. However, using leveraged etf's does not necessitate fully investing in them. Here's an example:
Let's say you want 100% exposure to SPY. You could:
A: Invest 100% of your money in SPY
B: Invest 33% of your money in UPRO
In each case, volatility drift has the same effect on your returns. The difference between the two is that with case B, you can invest the other 66% of you money in different stocks or etf's. This gives quantopian users the ability to hedge and/or diversify their strategies more than if they could only put their money in SPY.
This is why, as far as I can see, volatility drift is not necessarily a downside of leveraged etf's. Algo writers can control the volatility of their strategies. Banning leveraged etf's just restricts our ability to write good algos for the Managers program.
I'm aware that fees are still a downside, but are they really so bad that they're not worth that extra 66% of your portfolio?