Using IAM roles/identities provided by cloud providers instead of static secrets (like passwords or API keys) significantly reduces the risk of credential leakage. IAM roles enable dynamic and temporary credentials, meaning that they are automatically rotated and do not need to be manually stored or managed. This eliminates the need for hardcoding sensitive credentials into code or configuration files, which can often lead to accidental exposure or misuse if not properly secured.

Lowering storage costs is not a direct benefit of using IAM roles over static secrets. Facilitating data encryption is important for security, but IAM roles are not specifically focused on data encryption. Improving system performance is not a primary benefit of using IAM roles over static secrets. The main advantage is security-related, specifically the reduction in credential leakage risks.