I think from a crafting perspective the item system is pretty good though i'm not a huge fan of only requiring gold for upgrading items. It should require materials instead.
its also a bad idea to have everything crafted. Consider a system such as the following.
crafting system as it is now + semi-random ( ie Grim dawn/diablo style, found in chests and places where it makes sense etc) drops and finally cursed drops ( found off of special named enemies and chests and can be either a craftable item(cursed material) or a drop but is cursed either way).
use a system called magic toxicity where equipping too much magic can have negative effects on you like lowering your stats, regeneration etc. Crafted items would be the least toxic, most dependable, least powerful. Dropped items medium toxicity durability, power, and cursed items highest toxicity, lowest durability, highest power but also serious drawbacks. Cursed items can also be de-crafted to remove some of the negative effects and raw power.
this sets up a game where a player will try to balance the three different types of items to the greatest effect and opens the door for different kinds of play since you can play conservative, balanced or aggressive, and manage the toxicity accordingly.
most players would end up balanced with maybe one cursed item, a few drops and rounded out with crafted but you could do as you wish.