Does he deserve to be in the UFC? Sure... he is better than a lot of fighters on the roster... but I would argue he is capped in terms of potential.
A lot of fighters who have gone 8-3 have positioned themselves to where they could headline a Fight Night card, but Elias is arguably not even man card material in terms of draw... his attempts to step up in competition have come short, as his 3 loses are more telling than his 8 wins...
I am a believer that winning matters, so I am not going to fault any fighters style, it is the result that is important. In Elias' case, he has won against low tier competition. He has not entertained, he is not a big draw, nor do I think he is a future contender. If you take this into consideration, cutting him makes sense.
It is not like Dana is going to 'rue the day' that he cut Elias, paving the way for him to sign with Bellator and go on to a legendary career.... could it happen? Sure, but you have to make decisions, and I think this is a pretty safe one to suggest that we know who Elias Theodorou is, and that is a good, serviceable fighter... with good looks and personality, but not that exciting to watch....