When you find yourself in the dungeon of the Palara waterfalls, where the Heavenly Hand will lead you, carefully examine the location. Outside or inside you will find ritual daggers. When you get at least one of them, go to the library behind the ritual hall and talk to Nidalaf. She will tell you that there are 21 ritual daggers in total.
One dagger is hidden in a cabinet in one of the rooms with quest characters. Look for the second dagger in the garden in which the girl is swarming (at the beginning of the dungeon, near the concerned guard). In this case, you need to pass the verification successfully. Stand in the vegetable garden and wait. The attentiveness check is triggered every few seconds.
Then go outside and kill all the undead at the location. You will take a few more daggers from their corpses. Also, be sure to climb the rock for your athletics test and find another dagger or two there. There are also several daggers that lie on the ground, and will only be discovered if you successfully pass your Spot check.
In total, inside and outside, you can find 20 close-fitting daggers – two inside and 18 outside.
Then perform the ritual with Eliandra. Wanderers will attack the waterfalls. Go outside and kill everyone. One of them will have the last, twenty-first ritual dagger. After obtaining everything, return to Nidalaf and complete the quest. As a reward you will receive experience points and Holy Dagger +3…