I Kinda liked what Valen said but not exactly like leveling the materia.
Why no make stuff like if you add this stone/materia to the crafting process you get certain aditional stat
But make it something like at start you can only add base materia/stone then you can add a more advanced materia afterwards /this can add different status/ then another until you reach a Master/Elite/S Rank whatever you want to call it

So we can have different gear witch varying levels of quality/status/abilities(ie double attack)
This way people can think twice about using gems also since you dont want to spend all the nice stuff on basic gear you will toss after a few days once you need new gear.

Or you can make long lasting personalized gear to match each player play style