A Steel Sword (name unconfirmed) is a melee weapon revealed in the A Sneak Peek at Hytale's User Interface blogpost.
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I can't wait to see how players progress from iron to steel and what tools it requires.
Steel is an alloy, right? Containing purified iron and carbon. I'm guessing some kind of process will be required to obtain steel. Most likely requiring a blast furnace with the purified iron and carbon in it. But that's just the realistic way to do it. It could be as simple as mining it out of the ground!