In order to reduce the ridiculous surplus of 1-3 star mats in the game, OOO needs to either:
a) Triple (yes, triple) the amount of 1-3* mats required for ALL Recipies. For 1* items maybe quadruple them.
or
b) Make a vendor that allows you to transmute 3 or 5 of any mat for 1 of a higher star item in its line. So for example, you can trade in 3 Frayed Cloth for 1 Fine Cloth, or 5 Perfect Snowball for 1 Everfrost. Perhaps this could also have a Crown or Energy cost.
Thoughts?
The problem with your first point is that you seem to be forgetting that the price of ALL lower star mats will be increased, not just the ones in the advanced player's inventories. New players have tons of mats that are completely useless to them because no one wants them, and even if they can sell them it would only be for 5-10 crowns each, or vendoring them for 1-5. Yes, each recipe a new player wants to make will require more mats of a certain kind, but all the other mats they have will suddenly be more valuable, so it will be much easier to make crowns and use them to buy the few that a certain recipe they want needs.
I agree that the beginning of the game is too restrictive to new players, which is why I think energy requirements should be removed from 1* and 2* recipes, but that's another story.
Yes, the higher star mats will be a little less valuable, but the at the same time all the lower star mats will be a little more valuable. This will basically just make things a little less lopsided in terms of rarity and use: having 200 Scrap Metal, 30 Iron Gear and 1 Heavy Gear, when a recipe needs 5 scrap metal, 2 Iron Gear and 1 Heavy Gear, is just a terrible system.
The players I was referring to are those first coming into the game. You won't have a surplus of any materials until you have played at least a reasonable amount. It could be difficult for people just starting out to get enough materials to craft even their 2* gear. I can imagine the process of starting out would be that more tedious, being that you don't start to make any progress until you reach tier 2. It would seem like more of a grind for beginners and that is something that could turn people off right from the get go. I am not arguing against closing the gap between the prices of materials, I am more focused about the appeal to new comers to the game.
Veteran players with reserves of CE/crowns are inevitably better at generating CE/crowns/mats than newbies. Any attempt to apply a uniform penalty hurts newbies more than veteran players, and any attempt to specifically penalize veteran players reeks of unfairness- and veterans are often the ones who recommend the game to friends and help get people interested in the game. In short, we're probably stuck with the system we have now, unless you want to alienate the portion of the veteran playerbase that didn't already shake their heads in disgust at the CE crafting hikes and 4* 5*binding.
Sure there are surplus mats out there but thats just what you get when there are so many players all getting tons of materials in a run. If you increase the amount of materials that recipes require its going to be strenuous on the newcomers and more beneficial for the veteran players. If you don't modify the drop rates but change recipe requirements all you end up with is a strain on those materials. Being that I don't know how frequent the drop rate is for those mats I can't say how common or uncommon they are. However high requirements for materials drives up the prices for those players that need them (benefiting those who have excess mats). It will make it harder on newcomers because they will either have to farm out tons of mats or pay increased prices for the large sums of mats they need. It already takes enough time to craft items as it is without increasing the overall costs of crafting. Veteran players who already have substantial or excess mats will have no problem being that they already have the mats they need or already have all 5* gear. This sounds like a pretty heavy material sink, but newcomers don't need to bear the burden. There needs to be more incentive for new players to join this game not more reasons to avoid it.
As far as your other idea goes I think that could work well, but alas it would inevitably drive down the prices of higher star mats because they would be easier to obtain. Either that or anyone with excess mats would just turn there mats into more valuable ones and try to get a better deal than what they would have gotten with the cheaper mats.