Skysteel tools are improved again with numerous gatherings and creations.
The process for upgrading your Skysteel tools is conceptually the same as in patch 5.25. You will need to farm / craft a specific amount of two unique items and then return them with your tool to upgrade. The fun part? You're going to have to farm / craft a shit of materials. To start this phase of the quest, return to the Foundation in Ishgard and talk to Neillemard again. Then, entrust the quest to Nimie to start the ball rolling.
Dion's role in all of this has changed somewhat. Instead of bringing all of the materials to him (that's Nimie's role now), you'll need to choose “Material Exchange” for crafting or collecting (depending on which tool you're upgrading). The process and quantities are different between artisans and pickers, although both are ready to work.
For Pickers, you'll see one of two items on your list under “Material Exchange,” and you'll need 10 high-quality versions of a new Skysteel material to grab one of your required items. Or, to put it bluntly, get ready to cultivate. And this, by the way, is just for the first step of the new upgrades. Also, your second item will be the “Hidden” drop of the collection nodes, so have fun. You can find the two items you need to collect through the collection log, under the Special tab and the Skysteel tools.
Craftsmen take care of their absolute favorite thing: the collection. You will need to craft two different items which will each be exchanged for another item via the Denys Exchange. You will need at least 3000 collectibles from the 3 Star Recipe to get two of your required items, and 2000 from the 2 Star to get two from the second. 4600+ and 4000+ will earn you five of each respectively. Again, this is only the first step.
Once I melt my face and hit step 2, I'll update this guide, but it goes without saying that Skysteel Tool upgrades in version 5.35 are pretty straightforward. Painfully, tediously simple. Now excuse me as I chop down Yanxia for a slightly better ax.