Introduction
Brokkr is a dwarf craftsman who, together with his brother Eitri, forged several of the most important treasures of the Norse gods, including Thor's hammer Mjolnir, in a legendary smithing contest against a rival pair of dwarves set in motion by Loki's mischief.
The wager
After Loki cut off Sif's hair as a prank, Thor forced him to have the dwarves replace it with real gold hair that would grow like living hair. Loki commissioned the sons of Ivaldi for this and, on the same visit to the dwarves, wagered his own head with Brokkr that Brokkr and his brother Eitri could not make three treasures finer than what the sons of Ivaldi could produce.
Forging Mjolnir
While Eitri worked the forge, Brokkr worked the bellows, and Loki, trying to sabotage their effort and win his wager, transformed into a fly and bit Brokkr repeatedly, once on the eyelid, drawing enough blood to blind him briefly. This caused Eitri to pause the bellows for a moment during the forging of Mjolnir, leaving the hammer's handle shorter than intended, though the hammer itself remained perfect in every other respect. Alongside Mjolnir, the brothers also produced Draupnir, a gold ring that drips eight more rings of equal weight every ninth night, and Gullinbursti, a golden boar that can run through air and water.
The wager's aftermath
The gods judged Mjolnir, despite its short handle, to be the finest of all the treasures shown, since it would protect them from the giants, and Brokkr won the wager. When he came to collect Loki's head, Loki pointed out that the wager had said nothing of his neck, and Brokkr, unable to take the head without cutting the neck, instead sewed Loki's lips shut as a lesser punishment.