Condition degradation is already in game. But mostly from blocking/counterattacks, or armor&clothing from getting hit. Or shoes wearing down from walking.
There’s dev.plan for moisture for body heat loss, fire lighting difficulty. Adding item wear could be sort of piggy backed to that.
But most knives and metal tools when not in use, would’ve been kept in their sheaths, to minimize their exposure to elements and random songs anyway.
Except shovel. Poor shovels get beat up, dirt, roots, crud, rocks. And no cozy leather scabbard to rest in.
For those that do not like the degradation: Urw.ini has a setting to disable the equipment wear damage.