I originally created and posted this guide on my Alliance’s website in order to provide some extra help to beginners, posting it here to potentially benefit many more beginners.

Ok, the Ancestral Forge, the source of Jade Combining, Pet Melds, Soulstones and most of all — frustration, I’ll attempt to simplify.

Jades come in their lowest form as Raws which give minimal status boosts when embedded into Armor/Weapons. In order to create the next level of Jade, two units of the previous level Jades is required, for example; 2 Raw Jades of Fog makes a Crude Jade of Fog. Although you can embed them into items at this stage, I wouldn’t advise it, due to the process being costly, so in order to get the best of your Jades don’t bother embedding raws. Your best bet would be to save all you raws until you have enough gold to meld them together to create higher level Jades which give increasingly better stat boosts. One requirement for melding lower level Jades into higher level Jades is a character of level 30 and higher.

First Step: Jades

• Acquire 2 Raw Jades(Fog, Rain, etc.)

Second Step: Secondary Material

• Head over to the Blacksmith right next to the Acestral Forge and buy 1 Smithery Goo. Each attempt to meld Jades consumes 1 Goo, fail or success, they’re pretty cheap, only 10bronze a pop.

Third Step: Access

• Access the Ancestral Forge and choose the 2nd option — ‘Forge’

Fourth Step: Input

• At this point you should see the 1st image below, also, Jades you wish to combine have to be in a stack of 2 or more, adding a single Jade to 2 slots and attempting to combine won’t work. The process of combining the Jades also costs gold for each attempt, detailed costs are listed below. Now simply right click the Smithery Goo, enough money to attempt and the Jades(stack of 2 or more), you should now have the 2nd image, then just hit Start to begin the process.
  
  
  

Fifth Step: Success or Failure

• Success comes in one form; the creation of the next level Jade. Failure however comes in two forms; the meld can fail and only 1 Jade can be lost or it can ‘Failed to Combine’ and both Jades be lost, frustrating yes, however the payoff for successful higher level Jades can be very rewarding.
  1. 2 Raws + 15silver = 1 Crude
  2. 2 Crudes + 1gold = 1 Common
  3. 2 Commons + 2gold + 14silver = 1 Fair
  4. 2 Fairs + 3gold = 1 Refined
  5. 2 Refined = You’re pushing your luck buddy.

That’s about it for the Jade Melding, next is the much-maligned, Soulstone creation.

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2. Creating SoulStones/Breaking Weapons/Armor

The most popular question would be ‘Why do I want to make Soulstones?’ or ‘What do I get out of it?’. Simply put — you don’t have to, Soulstones are completely optional and not a necessity. The benefit to creating Soulstones is that Clans and Alliances require them to progress, e.g. the Clan Skill Winter Rations requires Soulstones and not member usage to level up. In Alliance they’re used to raise the maximum amount of clans allowed in the Alliance. So basically, you’re not pressured to create Soulstones with all your money and be broke — no, we don’t want that, however it’s good to see active members who participate in Soulstone donation and want to assist in the Alliance progressing. Ok, now that’s clear, here’s the steps in the process, very similar to Jade combining.

First Step: Choose an item

• Be it weapon or armor, bound or tradeable, it can be broken down into Soulstones. Items you don’t want anymore, can’t use or just want to get rid of, breaking them down is a good way to get rid of it and also participate in Clan/Alliance donation.

Second Step: Purchase an Empty Soulstone

• This is probably the worst part of the process for everyone — the cost. Head back over to the Blacksmith, each empty Soulstone costs 10silver, this might seem like a ridiculous amount at lower levels but becomes easier to swallow at higher levels.

Third Step: Input

• Similar to the Jade combining process, Access the Ancestral Forge once again, choose ‘Forge’, right click the Weapon/Armor and the Empty Soulstone. At this point you’ll notice the Soulstone icon pop up in the middle box with a number in the bottom left corner of the icon. The number of Soulstones created from the destruction of the item is based on the level of the item.

  Level 15 items: 4 Soulstones
  Level 30 items: 15 Soulstones
  Level 45 items: 21 Soulstones

  As you can see it gets more cost effective to create Soulstones at higher levels, but don’t let that stop you, if you’re low on cash, simply ask any Clan Leader in the Alliance to assist you with the cost. They’d simply purchase the Empty Soulstone for you or break the item for you and give you the Soulstones to donate.

Fourth Step: Collection

• Now that you’ve got you Soulstones you can now Donate them, yaaaay! *Awesome* You can head over to the Partnership Director and choose to Donate to Clan/Alliance. Clan donations require 50 Soulstones, Alliance donations have no requirement, u can even donate 1 if you like.

Credits go to Rock.