By using 9 green dye, the player can craft 1 leather. This is in reference to real life, where leather can be made from cactus. The reason to use green dye instead of regular cactus is to reflect the "processing" element as well as to let the player get XP from smelting. In terms of gaming balancing it is actually more balanced than say, hoglin farms. Some people like myself don't want to kill animals for leather, and piglin bartering for leather is quite inefficient.
An AFK hoglin farm that only takes maybe an hour to build gets 252 leather/hr. A cactus farm gets 190 cactus/hr per layer * 8 layers = 1520 cactus/hr. 1520 cactus/9 = 168 leather/hr. Source: Shulkercraft YouTube.
Next, simply make all dyes compostable. There is a datapack which has a chance of 10% for all dyes and that seems about right. (more compostable items datapack)
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