Items give a certain amount of power when destroyed.
The first level up on an item is:
"Item level"x10=Power needed to level up
Lvl 18x10=180 power needed to level up
For level 2 it's the same as level one
For level 3 it's double from what you needed for level 2.
For a torso each level gives +5hp, legs get +1dmg, weapons get +1dmg and that's as far as I've got while looking in to it ^_^
That's as far as I've got
These are only assumptions from what I've tried out so far. Just play around with it