The Diamond to Crystal Chest Upgrade is used to transform an already-placed Diamond Chest into a Crystal Chest without displacing the items inside. To use it, simply hold it in your hand and right click the chest you wish to upgrade.
Like all upgrades, this is used to increase the space of a chest without needing to empty and break a chest. However, it is more expensive than crafting the chest.
To compare all available upgrades, see the Metal Chest Upgrades page.