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Soul diamonds are the rewards from completing adventures. There is no specific explanation of where they come from and how you get them, but I see it as another form of concentrated soul-energy, generated after gaining experience from completing the various tests in an adventure.

These soul diamonds are used to buy special items such as boots, relics, animal equipment, shields, armours and focus crystals from a passing soul-huckster.

The greater your level, the higher the soul-diamond reward for completing an adventure. Also, the more trials you have to pass, the greater the reward.

Length of adventure

Soul diamond reward (X= player level)
2 tests X * 0.5
3 tests X * 0,75
4 tests X * 1
5 tests X * 1,25
6 tests X * 1,5
7 tests X * 1,75
8 tests X * 2