The Dark Divinity 3.0

[Velox]

So based off all the lore we know so far, the timeline would go like this


Urth causes trouble for the Allagans. (do we know what she was doing?)
Allagans pursue Urth.
Urth calls for the famous warrior Odin to aid her.
During Odin's trip down south, he comes in contact with another warrior who wants to fight (we can assume he's possessed to want nothing but bloodshed)
This unknown warrior is extremely skilled and is the first person to ever come close to beating Odin.
Odin is impressed with his skill, and ultimately ends up taking his blade (which turns out to be the Zantesuken). Most likely he was seduced to pick it up.
Odin becomes possessed by the sword to desire combat and bloodshed.
Odin arrives in the Shroud, but instead of helping Urth, now kills her.
Allagans get wind of this and go about researching what happened.
Allagans come across Odin, who then attacks them.
Allagans are getting their asses handed to them.
Wiyu, the most powerful of summoners, sacrifices his own lifeforce to seal Odin away.

I hope I didn't miss anything.

What we know is that, for reasons unknown, Zantesuken is the primal here. The sword itself desires to possess the strongest of the strong (it might have an ultimate goal that we don't know of yet). After its host is defeated, it consumes the next person who was strong enough to destroy the previous avatar. We can assume that Odin, as a warrior, was a man of EXCEPTIONAL skill to be able to defeat the previous Zantesuken host and the attacking Allagan force. We know Wiyu sealed Odin, but we don't know. I think it's safe that we can assume one of two scenarios.
1) None of the Allagans there had the strength to beat Odin, so the only way to win was the sealing.
2) Wiyu, being a genius, figured out that it was the sword itself that was possessed. Knowing that, he decided to seal it away since he knew that by defeating Odin, the sword would have taken over his own soul (being the next strongest being), and possibly destroy the entire Empire using Wiyu's power.

What we are sure about is that Zantesuken is like the One Ring from the LotR universe. It's an object, but has a small amount of sentience that allows it to sway the minds of men to do its own bidding. The One Ring desired to return to its creator by using its hosts (ringbearers) as tools to get there. Zantesuken desires to find the strongest host in the world, or at least one with a certain level of strength to achieve some unknown goal, and uses his hosts to kill each other until that goal is met. We also know that, unlike the One Ring (which was forged as an object), Zantesuken is a primal. We can assume that, some time ago, a group of beings created it through prayer. Primals are given form based on their follower's beliefs. That form doesn't necessarily have to be a walking-talking creature. Zantesuken was given the form of what they desired most, which was probably a weapon that could smite all foes to establish a dominance over the world. However, for whatever reason, Zantesuken is no longer in the possession of these beings who created it. It still retains its worshipers' desires though as long as it exists and acts through whoever picks it up instead.

EDIT:

To add my own headcanon here. I think the creators of Zantesuken are still alive (obviously not the same ones, but generations after generations) supplying it with the prayers it needs to sustain itself. Because of this, I assume it was their goal all along for Zantesuken to be passed around the world in such a matter for thousands of years. It's my belief that, at some point in the future, Zantesuken will finally find the person who has the strength the original creators desired. Once it does, it will return to the origin of its birth. Zantesuken possesses not only the body of the person, but also absorbs his will, his experience, his lifeforce, his knowledge, and his power. Zantesuken was created to gather all this information so that it becomes a super weapon for its creators.