According to legend, the Knife of Papnica have been passed down and were used by heroes from the Papnica royal family. The Knife was made with Papnica's special silver which why is attack power is stronger than a normal knife. Soon It was Dai's main weapon not only to protect himself but to fight enemies with it and it was his special treasure.
It was destroyed by Dai's Draconic Aura in his second battle against Baran.