Arcane Materia is required as a material for unicorns to enchant artifacts.
Unicorns utilizing the science talent can infuse Frozen Essence Drops at a certain crystal that gives off particle effects located in the Crystal Kingdom. Science level 6 or higher is required to make Arcane Materia.
The location of the crystal where Arcane Materia can be created, shown by player location on the map.
It should be noted that you should only carry as many Frozen Essence Drops as you want to make into Arcane Materia, as interacting with the crystal to infuse them into Arcane will use up every single Frozen Essence Drop currently in your inventory, the same applying for Energy and Vapor Materia. Every 2 Frozen Essence Drops grants 1 Arcane Materia.