It doesn’t do it in 2.1.0.5 Stable for me. I didn’t expect it to. How far in the past?
I think 2.0.8.1 gave a password suggestion, but 2.1 made password mandatory.
New security system has me posting both dialogs, and making your suggestion, which didn’t happen, probably because assuming first user is legit is hazardous.
Counter-argument is set-on-first-use of new install can help Service and Docker. Duplicati is empty then, but upgrading password-free 2.0.8.1 could also happen. Argument why first user should be trusted there is all 2.0.8.1 users were trusted.
Bottom line is I “think” you’re thinking of 2.0.8.1. Your issue might go back to 2.1.
As for original post, I “might” have had a password go away, on a Duplicati once, however I’m doing so much odd stuff on these systems that it’s hard to pin down.