Essences are spheres of color that can be collected in various levels and used in Alchemy with Stones to make Materials. Essences come in 9 colors: Red, Orange, Yellow, Green, Blue, Purple, Black, White and Pink.
Every material has a different combination that requires one essence and one stone. To figure out the respective combination for a certain material, select it within any inventory. Under the material's name, the combination to make it is represented as two icons - the leftmost icon indicates the essence required and the icon to the right of it indicates the stone required.
Essences and stones will never appear in chests. Rather, they are commonly found as item drops from enemies. If the player leaves a level without entering the treasure portal, then proceeds to the hub world, any gems collected by the player will break, yielding essences and stones.