You have to meld it with specific materia. It should say what kind inside the quest journal.
Don't worry, you don't have to purchase the knives again. You can go to Mutamix in central thanalan to get the materia removed.
Honestly, i wouldn't even bother with this relic. After a great amount of work, it will eventually end up being i135. This is only useful up to level 55-56. The time it would take you to get that relic upgraded would be much better spent on the main scenario quests and leveling.