The Banishing Blade was a dagger once owned by Homac that he could use to banish people from the world of Iwaku entirely. When he owned it and the means through which it was lost are unknown, but it made its way to the Temple of the Past, where fate intervened and Chaos discovered it. With it added to his arsenal, Chaos launched a successful siege of the Fantasy Tower.
When Chaos went into seclusion following the attack he determined using the Banishing Blade with his sword at the same time proved too unwieldy. Once he obtained his powers as a Counter Guardian, his first act was to use that power to eventually combine the two into his new personal sword Ragnarok. Ragnarok retained the Banishing Blade's power to banish people from the world and on that day the Banishing Blade ceased to be.