The sword is Gram--once held by Sigurd, first hero of Asgard. A sword of ancient magic, bathed in Dragon's blood...A sword of truth. To suffer the blade is to suffer all the truths you deny yourself. It always hurts. Sometimes it kills. And sometimes it saves your life. 
History
Gram was the sword which was forged by Regin Hriedmarson to be the bane of Asgard in retaliation against King Loki's murder of his brother, the shapeshifter Otr, and also to kill his brother, Fafnir, for his greed. Regin gave the sword to Sigurd, in order to kill Fafnir, and, bathed in the curse of Andvari's gold that flowed through Fafnir's veins, became entrenched with extremely powerful "truth magic". It was locked for eons by Odin in a special vault which required five keys to be opened, and it was meant to be for Loki if he be worthy.[2] The five keys were infused by Odin with the powers of "journeys", "endurance", "secrets", "new beginnings", and "brotherhood", respectively.[3]
In modern times, Loki gathered the keys and used it to open the vault and reclaim the sword as his own.[3] He used it to remove the corruptive influence of King Loki (without knowing what the corruption was) from his adopted brother, Thor, thereafter.[4]
Sigurd briefly usurped it from Loki as he went to "Kaluu", truly Mephisto, seeking to use its "truth magic" to provide a means to transfer religions and avoid the fate for him from the Disir. Failing in this, but being saved from a contractual torture, by Loki, he lost Gram once more before being sent to Asgardia.[5]
As Loki learned, his future counterpart was immune to its effects. King Loki also admitted to having manufactured the entire history of Gram retroactively after being expelled from Thor with its powers, creating "the cause to the effect".[1]
Gram was destroyed by Odinson during a confrontation after Loki revealed the true fate of his younger self.[6]Properties
Gram has certain unique characteristics on account of Andvari's curse:
- It is said that Gram is capable of piercing any lie with its "truth magic".[5]
- It can allow a possessed individual to understand their own corruption and thereby try to force it out of themselves, as it did for Thor when he was infected with a corruption following battles with Malekith, giving a nonlethal injury despite impaling him through his torso.[4]
- The amount of pain caused by the blade is connected to the amount to which and degree of the lie told by the victim to themselves, though it does draw blood when it strikes someone regardless of the truths. For instance, King Loki does not hide his true nature at all, and thus is virtually immune to its effects.[1] By contrast, Regin, who was forced to understand his own goals as not justice, but murder, was killed by the truth.[2]
- It can free individuals from telepathic influence, as the thoughts planted in them are untrue.[7]
