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@bubbley Read fluffyjesus’s post above for how the shards work. The game gives you 5 shards, but forces you to use one shard to upgrade whatever weapon Red was equipped with before you downloaded the update.
I’ll expand a little on what he said by letting you know that each shard rank improves the damage or health the item by 5% so fully upgraded items are 50% better than unimproved items.
The best strategy for using shards would to be to upgrade several items a little bit with weapons being the best items to upgrade, followed by off-hand items, then tops or flags and emblems would be the worst items to upgrade since they provide the smallest benefit. A flag or top upgrade will give you roughly twice as much health to your banner as an emblem upgrade. I wouldn’t bother upgrading any banner items until your weapons and off-hand items are upgraded.