Nemesis killed Sothis and crafted the sword out her body. He did that because he wanted power and didn't like being inferior to the goddess and her children.

What happened to Sothis?

In the end of Crimson Flower, after killing Lady Rhea. Byleth loses Sothis and their hair will turn from green back to blue. In the Church Route, if you don't S-support Rhea, then she will lose control of her powers and you have to kill her. If you kill her here, then Byleth won't lose Sothis and turn back to normal.

Is Sothis a God?

Sopdet is the ancient Egyptian name of the star Sirius and its personification as an Egyptian goddess. Known to the Greeks as Sothis, she was conflated with Isis as a goddess and Anubis as a god.