You're a bit deluded if you think the game is pay to win. Pay to progress does exist in DN, but it isn't "killing player retention". The amount of money required to progress substantially is in itself a substantial amount, so very few actually do that.
So the goal of the company is to convince people to pay for something. If, when confronted with this reality, players are choosing to A ) not pay or B ) leave the game, those are not outcomes that the company wants, and if the majority of their potential players are choosing either of those two then their design is hurting them. The prior option at least gives them the opportunity to make a sale later, and it's why one of the primary goals of this progression system, besides incentivising an elite purchase or hero ship purchase, is to keep players playing by dangling what they want just out of reach. However, when what they want is the core depth of the game, that can and will turn off players who might otherwise remain active members of the game long enough to become personally invested and actually contribute $ to the game (via purchases). It doesn't matter how sweet your goals looks, if a player isn't having fun anymore and the goal is too far away, they're just going to stop playing.
If it takes A YEAR to grind ANY ship in this game, even the dola, from t4 to t5, you're not playing the game, or you are playing as well as a hamster on drugs. Heck even a hamster on drugs queuing up and hopping on the keyboard could do better than that. Elite/xp conversion are not that big of a deal as you make it out to be. In the end it still comes down to how you are as a player. I haven't bought elite, excluding when I bought the founders pack. I have 9 t5 ships (haven't played in 2-3 months) and have a surplus of 2.6 mil exp on my vindi, and 800k on my valcour. The only significant means to boost progress assuming you play decently is buying credits, as there is a huge divide between exp and credits gained. But again. Ship's only as good as the captain.
Sure, but tell me: how many hours have you logged playing to get there?