Sky Sword is a powerful sword that is upgraded from the Rusty Sword and Worn-Out Sword. It is upgraded with black gems.
First you must craft the Worn-Out Sword from two rust shards. The Worn-Out Sword is not a good weapon because of its low damage and low durability.
The Worn-Out Sword does 4 damage and breaks after 20 uses.
To upgrade the Worn-Out Sword you will need four black gems. This will create the Rusty Sword. The Rusty Sword is a decent mid-level sword but can also be upgraded further.
The Rusty Sword does 9 damage and has 700 uses.
To get the sky sword you upgrade the Rusty Sword with four black gems.
The Sky Sword does 19 damage and has 2,100 uses.
All of these swords can be repaired at an anvil with black gems.