Normally I'm not a fan of magic items that level up as you do in D&D, but we'll see how it goes. You unlock a new enchantment on your item as you level:
"Effectively, this means 1 Enchanted Quality for a hero
levels 1-4, 2 Enchanted Qualities from levels 5-12, and 3
Enchanted Qualities from level 13 on."
Here is an example of a legendary axe, with three enchantments that would unlock at the above guideline:
Orcsmasher, Bane of orcs
Cleaving (unlocked at level 1)
Craftsmanship: Any
Item: Close combat weapon
When you successfully hit your target with a weapon
blessed by this Enchanted Quality, you automatically
deal an additional number of hit points equal to your
Proficiency Bonus to another enemy creature engaging
you in combat.
Fell (unlocked at level 5)
Craftsmanship: Any
Item: Any weapon
Add +2 to all attack rolls with this weapon.
Foe-slaying (unlocked at level 13)
Craftsmanship: Elven, Númenórean
Item: Close combat weapon
Special: Bane
When you attack a bane creature, this Quality extends the
critical range of your weapon by a number equal to half
your Proficiency Bonus, rounded up. For example, say a
8th level Scholar bore a broadsword with this Enchanted
Quality activated. With a Proficiency Bonus of +3, she
extends her critical range by 2. Thus, her broadsword
causes a critical on a roll of 18, 19, or 20.