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You can use Blood Stones at the Skill panel in Armory to level up your demons. You can do so by pressing the button below :

Blood stone button

The number of stones used will be according to your demon level. For instance, to upgrade your demon level from level 6 to level 7, you will need 7 blood stones. Higher levels will require more stones accordingly. However, you will lose your experience points if it goes beyond the max exp of each level.

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