Cursed Daedric Dagger

 is a unique enchanted Daedric Dagger.

Background
Interestingly enough, unlike Cursed Daedric Armor, which has negative effects along with the useful ones, Cursed Daedric Dagger does not have any curses placed upon it. As with the armor set, the dagger must be forged under an eclipse.

Acquisition
The only known Cursed Daedric Dagger can be found in Velar Ceysel, in Velar Malamath's hidden chamber.

Enchantment
The dagger bears a unique enchantment: Instead of filling Soul Gems, enemies' souls feed the dagger, strengthening the enchantments placed upon it. The dagger's strength depends on the number of souls it consumed: The dagger's soul counter resets every two days if the weapon is not used.
 * Absorb Health
 * Soul Siphoning
 * Banish Daedra
 * 0 Souls - Absorb Health 15 points. Can only banish lesser Daedra.
 * 5 Souls - Absorb Health 30 points. Can only banish lesser Daedra.
 * 10 Souls - Absorb Health 45 points. Can banish sentient Daedra, e.g. Dremora.
 * 15 Souls - Absorb Health 60 points. Power attacks with the dagger can send an area-of-effect blast that banishes any Daedra within its radius.

Smithing
Cursed Daedric Dagger can be crafted using the following components:
 * 1x Ebony Ingot
 * 1x Leather Strip
 * 1x Daedra Heart

Alternatively, those practicing Daedric Magic can coalesce a Daedra Heart and an Ebony Dagger.

Cursed Daedric Dagger can be upgraded using Ebony Ingots. The smith must be knowledgeable about improving enchanted items to do so.

Trivia

 * The enchantment shader makes the dagger look like it's been stenched in blood.
 * The dagger may be considered cursed because of its Daedric nature and the ironic ability to banish Daedra.
 * The dagger is the only known cursed Daedric weapon.