Alchemy is a great feature that allows players to craft Enchantments to strengthen themselves.
To conduct Alchemy, you need to gather different Alchemy Ingredients and use them to create Enchantment Scrolls to strengthen your character. The ingredients can be found by completing daily instances to get and Award which contains ingredients (look at the Hero Palace link under the Mountain Titan link full all the instances with Alchemy Ingredients). After you have some ingredients, you can conduct Alchemy at an Alchemy Institute found in many empires. You can also find Zhang Mei's Alchemy Shop in Nine Dragons. She will let you perform many of the same procedures that empire Alchemy Institues allow, but she charges a higher price (Panda's are expensive pets after all).
A Lv1 Alchemy institute will let you choose to decompose various gear you no longer want. The rarer the gear the better the type of Alchemy Cream you will get (Basic, Uncommon, Common, Rare, Epic, Secondary, Senior, and Powerful Cream). All are useful so try different types of gear and see what you get. In empire Alchemy Institues, look at Lv3 and and beyond institutes for Alchemy Synthesis recipes. Each recipe will tell what parts you need to make the scroll and the fee required to craft it once you have the Alchemy Ingredients. Once you get an Enchant Scroll (either make one or puchase one at a trade post), you can use Lv2 Alchemy Institute to Enchant an equipment in your bag with the scroll. Currently, only a weapon, an earring, a charm, a necklace, or clothes can be Enchanted. Each of these can have one enchantment per item. Thus, you can have 5 Enchantments (4 if you are a barehand fighter but don't worry the barehand Enchantment more than makes up for only getting 4 slots).
Look in the Nine Dragons Alchemy Shop and plan ahead for what level of Enchanment you want to get. A Lv2 version of an Enchantment takes two Lv1 versions. To remove an enchantment, click on Shop and spend 350 silver to buy a Remove Enchant Scroll. This scroll will remove an Enchantment from a gear in case you decide that you want to use a different Enchament there instead. However, this destroys the Enchantment. Your gear will not be harmed. Think carefully which Enchanments you wish to use and what level. You can craft 3 levels of Enchantments currently (Lv1, Lv2, and Lv3). Don't worry about Enchanting a Lv1 Enchantment. You won't waste it by Enchanting it now. To equip a Lv2 Enchantment you must first have a Lv1 version already Enchanted on the equipment that you want to add the Lv2 version. Similarly Lv3 requires a Lv2 version before the Lv3 can be added to the Enchanted equipment.
Some Alchemy Ingredients for Lv2 and Lv3 Alchemy Enchantments haven't been released yet. If you can't create a higher level version you want yet keep working at getting parts and be patient. Work on Altonia, Moon River, and Zolodi instances. These Instances have Awards that may give Melting Stones, Moon River Cream, and Undead Power which. Get 3 of each are needed to make a Soul Powder which is useful in crafting many Lv1 Enchantments. You will need 7 of the same Lv1 Enchanment to reach a Lv3 Enchanment. Six Lv1 Enchanments will be converted into 3 Lv2 version. Two of the 3 Lv2 versions will be converted into 1 Lv3. I recomment Enchanting the equipment with Lv1 first so you get some immediate benefit then work toward upgrading to Lv2 and finally to Lv3. You may decide that you only want to stay at Lv1 and sell the Alchemy after that to gain gold coins.
The Enchantments themselves consist of Passive and Auto skills. An auto skill Enchantment behaves just like a regular auto skill. It will show up under your auto skill section and can be ordered just like a regular auto. One benefit is that it does not count against the number of skills you possess. Another benefit is that it allows you to learn many powerful skill versions that may be available generally used by a certain class only due to sp and cost. The most important benefit is the sp cost savings. Passive skills are quite valuable as they either add stats or increase %s of stats. Keep in mind that you cannot stack the same Enchanment (i.e. four Lv3 Soul of Boxing gives 96% barehand damage and 20 hit NOT 384% barehand damage and 80 hit lol). To date, I have not seen any Active Skill Enchantments but this does not necessarily mean there are not or will not be any in the future.
Hope this guide helps on some of the basics. I am putting together a list of Alchemy Ingredient drops by instance and hope to have that up in the future. Feel free to mail me in game is you can share any data on what you got from which awards.