Yes for users. No for investors. If you invested in Dash at $500 and now it's $65 then it clearly hasn't added value to the network for investors, has it ?

On the other hand, if you're only "spending" Dash rather than investing in it to hold (e.g. you're using it for a cross-border transfer or something) then there may be some utility value depending on your needs.

This is an important distinction when it comes to store-of-value criteria. Because for the temporary "user" it doesn't matter what the value of Dash is as long as it holds its value for the couple of hours you're using it, whereas for the long term investor it sure does, so they are distinct markets. The big ICO tokens attract investment from targeting massive utility, like in the 6 or 7 figure transaction range per day.

On the other hand mined crypto sustains its value through establishing an equivalent level of scarcity corresponding to investment in the primary supply. (i.e. if I "invest" $1000 in Dash mining then that should roughly correspond to the value of the coin because my $1000 directly contributes to raising the difficulty through a process called competitive mining). That form of store-of-value works even if there's no or very little utility.

In bitcoin, you can invest $100,000 in mining equipment but to get any coin out of the chain you'll STILL have to contribute to raising the scarcity value of the supply by competing for it. So your reward is effectively a certificate of your investment in the scarcity value of the chain. That's why it has trading value in the secondary open market.

Lets now turn our attention to a special kind of "miner" that exists in Dash. Here you don't need to invest in mining equipment. Instead you just put up some collateral for a while, and during the time that your collateral is parked you are allowed to mine at ZERO DIFFICULTY. No nest investment in the chain is required (because your collateral is only lent). You mine for whatever period of time, receiving your rewards which are therefore a certificate of nothing. That's where the capital drain occurs (from an external store-of-value investor's point of view) because those coins were mined at zero difficulty, attracted no new scarcity value into the primary supply, but still get dumped on order books where they can make a profit at any price.

The masternode coins undermine the trading price because they can compete for orderbook liquidity with mined supply at almost any. price above zero, so continually drive the price down. (Which is the mechanics by which the "loss of capital" finds its way through to the trading price).

This was not the original idea. The original idea was that masternodes would NOT be mining at zero difficulty (effectively) because the reward would be needed for funding the service layer of the network, thereby making that aspect investible. But that only works if the reward is actually recycled, if not it's just a capital drain and should be invested in mining instead to work as a store of value while we're waiting on utility demand to reach a level that masternode rewards are justified.