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Tools have 3 states of durability. Over time the tool will start to look visibly worn, and eventually break.
For a list of variations on tools, see Moulds
Trees, branches and sticks can all be cut with an axe blade, though the tool equivalents usually work better than the more weapon-oriented ones. Flint can also be used if needed.
Blacksmithing is usually performed with a hammer.
Woodworking is usually done with a hammer and a chisel.
A rusty shovel.