That's about it for the Jade Melding, next is the much-maligned, Soulstone creation.

2. Creating SoulStones/Breaking Weapons/Armor

The most popular question would be 'Why do I want to make Soulstones?' or 'What do I get out of it?'. Simply put -- you don't have to, Soulstones are completely optional and not a necessity. The benefit to creating Soulstones is that Clans and Alliances require them to progress, e.g. the Clan Skill Winter Rations requires Soulstones and not member usage to level up. In Alliance they're used to raise the maximum amount of clans allowed in the Alliance. So basically, you're not pressured to create Soulstones with all your money and be broke -- no, we don't want that, however it's good to see active members who participate in Soulstone donation and want to assist in the Alliance progressing. Ok, now that's clear, here's the steps in the process, very similar to Jade combining.

First Step: Choose an item
Be it weapon or armor, bound or tradeable, it can be broken down into Soulstones. Items you don't want anymore, can't use or just want to get rid of, breaking them down is a good way to get rid of it and also participate in Clan/Alliance donation.

Second Step: Purchase an Empty Soulstone
This is probably the worst part of the process for everyone -- the cost. Head back over to the Blacksmith, each empty Soulstone costs 10silver, this might seem like a ridiculous amount at lower levels but becomes easier to swallow at higher levels.

Third Step: Input
Similar to the Jade combining process, Access the Ancestral Forge ESO GOLD again, choose 'Forge', right click the Weapon/Armor and the Empty Soulstone. At this point you'll notice the Soulstone icon pop up in the middle box with a number in the bottom left corner of the icon. The number of Soulstones created from the destruction of the item is based on the level of the item.

Level 15 items: 4 Soulstones
Level 30 items: 15 Soulstones
Level 45 items: 21 Soulstones

As you can see it gets more cost effective to create Soulstones at higher levels, but don't let that stop you, if you're low on cash, simply ask any Clan Leader in the Alliance to assist you with the cost. They'd simply purchase the Empty Soulstone for you or ESO GOLD the item for you and give you the Soulstones to donate.

Fourth Step: Collection
Now that you've got you Soulstones you can now Donate them, yaaaay! *Awesome* You can head over to the Partnership Director and choose to Donate to Clan/Alliance. Clan donations require 50 Soulstones, Alliance donations have no requirement, you can even donate 1 if you like.