That really depends. I want all my disks unlocked while or right after boot so that everything is always accessible. I don't have data thats needs to be super secure and therefore it doesn't need to be decrypted on the fly. The two benefits I want are:
1.) be able to RMA a failed drive to get a replacement even if I can't shred all data on it because of failures
2.) if someone breaks in and steals the server the power gets unplugged and everything is encrypted again
So I use initramfs-dropbear to be able to unlock the root disk over SSH while booting. After proxmox has finished booting a systemd script is run that will unlock all my ZFS pools. I store the keys on the encrypted root partition so I don't have to manually type them in. Because VMs cant start if the VM storage is locked I disabled that "start at boot" and start all VMs using a script after my VM storage is unlocked.
But this way the encryption won't help anything against hackers or attackers that have physical access to the server. If you for example got a VM for online banking it would be better to manually unlock it, start the VM, make a money transfer, shutdown the VM and lock the storage again.
I personally like passphrases more than keyfiles, because in case of an emergency I always can use the keyboard/IPMI and type it in to unlock a storage manually.