The Medallion of the Chaos God is a jewel created by the wizard D'Shane in times long past. It comprises two halves, one being a red crystal and the other a golden frame on a chain. The frame alone is also called the Medallion of the Chaos God, but is technically incomplete without the crystal. And it's designed to be that way. The Medallion of the Chaos God is a prison made to end the threat of the Chaos God, Solego, and can only perform its role when the halves are apart as each holds an aspect of him that needs to be kept from the other to break his might. The halves are conventionally stored in a jade block with images depicting the battle between D'Shane and Solego.
D'Shane made the Medallion of the Chaos God as the one prison that could hold Solego. The way it works isn't entirely explained, but seems to be as follows. Despite being immortal, Solego can destroy his own body, which is what D'Shane tricked him into doing. His powers allow him to restore or recreate his body, but the medallion was brought in at this moment of weakness. The crystal absorbed his mind, while the frame took his magic. Split like this, Solego became incapable of anything but hypnotizing and possessing anyone or anything that happened to touch the crystal and small holographic projections. Given that Solego did not part with the Medallion of the Chaos God upon resurrection, it might be that he's now bound to it. Alternatively, he might have kept it as reminder of D'Shane, whom he has some respect for for defeating him.
After Solego's defeat, the halves of the medallion were stored in a jade block decorated with art depicting D'Shane's winning move against the demon. The block itself was stored inside the Temple of Duumingluum, where it was found centuries later by the Potsherds. They removed it and the halves from it, aware they were risking something but still not meaning to put the world in peril. Fifty years later, Bisk Potsherd got the opportunity to make up for the mistake and returned the halves to the jade block, which he then gave to Scrooge McDuck for safekeeping at the bottom of the Money Bin.
Disney Adventures comics
At the time of Solego's rampaging on Rakkinroon, D'Shane uses his magic to create the Medallion of the Chaos God. He tricks the Chaos God into defeating himself by reflecting his magic back at him and locks his mind within the red crystal and his magic within the golden frame. These two items he sets in a block of jade, forever near to easily keep an eye on but never together. The jade block is placed within the Temple of Duumingluum, where it remains for centuries until the arrival of the Potsherds around 1940. They feel the medallion is bad news, but as archeologists want to research it. Professor Potsherd attaches a chain to the crystal to make handling safer and puts it and the medallion with the first shipment of artifacts for the museum. An attack by air pirates makes the medallion fall into the sea and the red crystal follows soon after. In 1962, Scrooge McDuck finds the medallion while diving off the coast of Wauie-Zauie. He refuses to sell it to the Potsherds, but does lend it to the Rakkinroon museum tour. Around 1990, the crystal returns to the surface in a fish and Solego possesses a fisherman to bring the crystal to the museum housing the Rakkinroon collection at that time. Events bring both items outside the museum, with the medallion ending up in the sewer and the crystal in a car miles away. The medallion is retrieved and sold to a pawnshop, where Scrooge McDuck discovers it a second time in his life. He buys it and sends it to McDuck's Jewelers in St. Canard. The crystal makes its way to Duckburg in the car, being towed in on order of Solego posing as Scrooge. Solego hypnotizes Fenton Crackshell into picking up the crystal and takes possession of the Gizmosuit when Fenton calls it by impulse. Solego uses the suit to get to St. Canard and arrives at McDuck's Jewelers before Darkwing Duck, warned by Scrooge through SHUSH, does. He merges the two halves into one full medallion and proceeds to wreak havoc. He goes after Darkwing when the crimefighter challenges him and by pure luck Darkwing uses a satellite dish the same way D'Shane used his shield. With Solego still wearing the Medallion of the Chaos God, the blast automatically locks him back inside the halves as the medallion falls apart once more. Darkwing gets the pieces safely to SHUSH Central, where Scrooge, Bisk Potsherd, and others also gather. Bisk explains the course of events as far as he knows and can deduce, then, as a matter of family honor, places the halves back into the jade block, which he then entrusts to Scrooge McDuck for safekeeping at the bottom of the Money Bin.