Needs rewriting.
Coinighy started as a seaport for selling ore from the mines in the Spine Mountains before the coming of Dwarvenhelm. Once Dwarenhelm started producing much better-quality ore, weapons, and armour, Coinighy declined, arousing a significant resentment between the citizens of Coinighy and the dwarfs of Dwarvenhelm. While this did not result in an outright war, both sides carried out raids of various sorts.
The O'Malleys moved Coinighy's trade into timber and farming produce to reduce tensions. By luck, this resulted in a vital trade monopoly on various exotic herbs, spices, plants, and animals. These breeding programs in animals and plants resulted in highly sought-after spell components.
The O'Malleys realised that this situation could not continue and brokered a peace with Dwarvenhelm. As part of this peace deal, a trading village was constructed at the base of the mountains near Dwarvenhelm. This village became known as Market Town.
Over time, Market Town resulted in a co-dependency between Dwarvenhelm and Illyria in producing magical items. Without Illyra's trade in exotic components, Dwarvenhelm would not have had as much success in creating magic items. The result was a substantial economic boost in trade for both Dwarvenhelm and Illyria.