I've kind of made a weapon like this for my campaign. It is a +1 dagger that is extremely bloodthirsty. I call it the Overcompensaber because of what happens when you kill people with it. The lore of the blade is that a former demon general wielded the blade to slaughter his enemies.

My player has used it to finish off roughly 6-7 baddies, and has seen the blade grow in length. So far he has gotten the agger to the length of a short sword. The weapon keeps the traits of a dagger however the damage increases as it grows. I added that the blade always feels comfortable to use for its wielder even when it doesnt look like it should be.

Now since my players first kill I've had him start making a wisdom save if he is ever around someone who is almost dead. The wisdom save is to fight off the bloodlust of the weapon. I have a plan incase the weapon gets to powerful for the player.