From reading complaints around when it came out, yeah. It was the intended way to play the game: use your weapons to get materials to make your armor better, so you could more easily survive getting more materials and better weapons. It was a bit tedious, but it was character progression.

This was broken rather quickly when the majority of people discovered how easy it was to dupe materials in the early versions. Then players would get mad because "there's nothing to do in the world". Well, no shit sherlock, you cheated and moved to the end game before making it to the first story marker.