Iron tools and armor are smelted into iron nuggets. Gold tools and armor are smelted into gold nuggets. I propose several things to expand and improve this.
First I propose several additions to the types of equipment: Wooden tools gets smelted down into charcoal. Stone tools gets smelted down into stone buttons. Leather armor gets smelted down into torn leather which can be crafted into 3 leather or used to repair leather items (that may have durability in future). Chainmail armor gets smelted down into iron nuggets. Netherite equipment gets smelted down into netherite nuggets.
Other tools may also be smelted down as well; flint and steel, empty buckets, shears are smelted down into iron nuggets; while other items such as sheilds are smelted down into charcoal; spyglasses get smelted down into raw copper; name tags get smelted down into leather; saddles get smelted down into torn leather or iron nuggets. There are many more items that could have these recipes.
My next proposal is the amount of a resource should depend on the amount of material for the item. As an example an iron pickaxe should produce 3 iron nuggets (one for each iron ingot). Some items may produce several possible items, such items would be best to smelt in a smelter system.
Finally, every enchanted item should produce at least 22% to at most 68% the worth of the items enchantments in XP. This would be a good way to get back xp from items that may have been difficult to enchant or a way to get the xp from loot.
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