Can database on external drive lead to data loss?

I don’t think Duplicati ever does anything like that, even if you delete a backup job and destination files.

One risk of USB drives is filesystem corruption, e.g. if the drive is pulled at a wrong time. It depends on operating system and settings though. An unplug may also damage individual files such as a database.
It’s probably safest to properly eject/unmount the drive, to be sure nothing’s active and data got written.

If all the destination files are intact, getting the database back might be as simply as doing a Recreate.

Seen where? Restore screen? Did you notice if there was anything at all, e.g. things from the job logs?
Did you save the database or note its size? Any odd error messages ow warnings while looking at job?

How so, other than maybe adding one more thing to be potentially damaged by the usual USB hazard?
The scheme was written up here with some testing, and has had some links as a possible rotation plan.