The Magic Dagger can be a very effective weapon if you have a Mana Flower equipped as you can almost infinitely throw it as long as you have enough mana potions. With adequate mage equipment, you can get the mana cost of the daggers down to just 3 mana.
Combined with the fact that Mimics drop around 10 , farming this dagger can be an efficient money making tactic, as it sells for an additional 20 .
It has the same sprite as the Throwing Knife, but with a yellow tint.
To make up for its lax knockback, it has fair range, is mana efficient, and can dish out high DPS (damage per second).