Upgrading, Engraving, and Repairing

The Blacksmith
Upgrading equipment to higher grades, engraving equipment to prevent it dropping upon death, and repairing equipment to prevent it from degrading all take place at any blacksmith in FFO.

Upgrading
From Worthless to Perfect, your equipment's grade will determine it's stats and effectiveness. Each upgrade over base quality increases that piece's given stats and attack modifier by 5%, as well as an increase in durability. Each degrade below base quality reduces it by the same 5%, and a decrease in durability. This means a Standard Rapier will have 1.05x the stats of a baseline Rapier, and a Fine Rapier will have 1.10x.

The 5% increase in stats per upgrade means that lower tier equipment that has been highly upgraded can and will be more effective than baseline equipment of higher tiers. The equipment Silas gives you at the beginning of the game also has the special property of being extremely inexpensive, meaning that you should fully upgrade your Silas gear and use it until you're sure you've found something better.(no longer possible as a recent update made the silas gear unable tobe upgraded) Upgrading will drastically increase the cost of a piece of equipment.

Engraving
Engraved equipment will never drop on death, and cannot be used by other players. Engrave pieces of equipment which you don't want to replace in the near future. Engraving will depend on the cost of the piece, so it is recommended to engrave before upgrading equipment. You can only unengrave equipment that is engraved with your name.

Repairing
Equipment in FFO is damaged when it is used. When you are hit by an enemy, the random equipped piece of armor that it chooses to hit will take durability damage. When you hit an enemy, your weapon will take durability damage. Staves take durability damage when magic is cast while using them. Durability damage occurs before mitigation, meaning your defense, blocking, fog, barrier, and anti-elements do not effect durability damage. As your equipment is damaged, it's color in the HUD will change.

Repair cost for equipment is determined by it's cost, so highly upgraded equipment will be more expensive to repair. Elements and suffixes also increase the cost, which can lead to some equipment being prohibitively expensive, but extremely effective.