There's nothing wrong with being able to convert U/U equipment into materia

...The problem is they need to give us a reason to do so. Allow specific equipment to become specific materia. Imagine if all of the open world NM's drops were guaranteed to convert into certain materia? Just as an example, if Elmlord's Tusk would always become a +crit potency materia (Tiers 1-4, of course)? That would keep those NM's relevant (Unlike they are now) as they become a sure fire way to get what you're looking for.

Taking it a step further, they need to create new, unique materia that can ONLY be obtained by converting certain weapons. Another example (And this is without balance in mind, just an idea), what if Ifrit's Battleaxe could me melded into the "Ifrit's Rage" materia, which when slotted into weapons gave them a chance to proc fire damage? Again, a fantastic way to keep old content relevant, and would add a lot more customization to character building