The Lotus Blade is the mystical blade, which Toshimiru, founder of the Yamanouchi Ninja School, used to carve the entire ninja school with.
Although it might be able to be wielded by normal people, it will only transform into other shapes if it is wielded by one with Mystical Monkey Power, such as Toshimiru, Monkey Fist, Ron Stoppable, and Rufus.
It can transform into a whole lot of different things if wielded by one of these. It will also return if called by someone with Mystical Monkey Power, as long as their heart remains pure.