Is Eth only used for transaction fees? Of course not. It is used as a currency. Like USD or EUR. All of those currencies do have value, although they are made out of thin air and "backed" by an insolvent country. Not because the transfer costs, but just because it is used. The more people use it, the more precious it becomes. Thats why the USD has the highest market cap of all currencies (about 12 trillion), because its the most used one. If iota gets mass adaption, the usage increases and with it its market cap. The transaction fees don't count here.