The cloudscale cloud controller does set the IP in the service object status .status.loadBalancer.ingress.ip. This causes the Kubernetes cluster is routing the traffic internally. Which is a positive behavior, as it is faster and comes along with less overhead.

However this effect causes big headache, if the final system expects something the load balancer adds in between. In this case the proxy protocol. Internal traffic sent to the ingress controller is just invalid, because it will not be encapsulated by the proxy protocol.

This seems to be a long standing issue with Kubernetes. As soon as the IP is known by Kubernetes the internal path get's enabled. A solution is planned, but it will take time until this is stable and available in the production environments.

There is a workaround for example AWS has implemented. Just not set the IP but the hostname.