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Legendary Shards are a currency in Destiny 2.
Legendary Shards are obtained by dismantling legendary or exotic weapons, armor, and mods.1 shard is obtained from legendary mods, 3 shards are obtained from legendary gear and 5 shards from exotic gear. They can also be obtained through redeeming various faction reward engrams.
Legendary Shards are used when infusing legendary or rare gear into legendary or exotic gear. The shards may also be spent on reclaiming exotic weapons and armor from your collection in the vault or buying exotic gear from Xûr.