If the lore is filled with tales of brave and heroic deeds it also has its shadow side. Darker deeds done by a god. Enter Loki. A much darker trickster god who slips his way through the lore. Like the multiverse itself Loki provides a balance of dark in a realm of light. He has his justified place alongside the heroic deeds of the other gods. He just goes at things slightly sideways.
Take the example of the feast where Loki calls out the rest of the gods on their personality shortcomings. Why does he do this? Is it just to make himself seem superior in a room filled with brave and heroic deities? I say not. I believe that the purpose of the tongue lashing is to help the gods see areas for self improvement. Just like all sentient beings the gods are subject to evolution. Perhaps the telling it like it is episode of Loki simply was there to show off areas that needed improvement.
As the bringer of Baldur’s death Loki served as an example of the treachery of nefarious deeds. All through the tale his actions are of a deceitful kind. His refusal to weep at Baldur’s death served to only place the last nail in the coffin. Baldur was doomed to exist in Hel. But does the action of Loki here not set the stage for a glorious rebirth of Baldur after Ragnarok? Even here Loki’s actions serve a higher good. Once again he sets the stage for growth.
Every set of tales needs to be balanced between light and dark. Otherwise the tales are woefully one sided. Loki and his deeds serve as that balance. Because of his example the deeds of the other gods can be viewed as heroic and brave.
Some say Loki is merely the dark aspect of Odin. I’m not sure where I stand on that issue. But it makes for some interesting speculation.
All great works of literature need a villain. The Eddas have a fine example in Loki. But is he such an evil deity after all?