Experience and Weapon Upgrades
The experience and weapon upgrade systems were new to the Ratchet &Clank series in "Locked &Loaded." Ratchet gains experience from killing enemies. He gains a new level of Nanotech each time the experience bar completely fills up. Nanotech functions as health in the game. In addition, he can also gain Nanotech from upgrade items. This results in a maximum of 80 Nanotech. Ratchet can also further improve his survivability by purchasing better armor over the course of the game. Armor gives a flat percentage reduction to any damage he takes, which helps to conserve his Nanotech.
Weapons are upgraded based on use. While you could potentially get through the vast majority of the game using only the starting weapons, you will ultimately be weaker for doing so. Each weapon has its own separate experience bar: As you kill enemies with that particular weapon, it gains experience. Once you fill the weapon bar, the weapon will upgrade into a more powerful version of the same weapon. Usually this means doing both more damage and often either firing faster or more efficiently or hitting a wider target area.
Bolts
Bolts are the in-game currency and are used to buy new weapons, armor and gadgets. In addition, bolts can also be used to buy additional ammo. Using bolts wisely can make the game easier in the long run. Generally, armor should be a priority since each upgrade represents a very significant cut to the amount of damage Ratchet takes. With Carbonox Armor, Ratchet's 80 Nanotech would be equivalent to Ratchet having 400 Nanotech with no armor on. One of the easiest ways to conserve bolts is to not buy ammo unless absolutely necessary. You can get ammo for free from power-ups in the levels, so spending bolts to buy it from vendors will mostly just slow down your purchasing of items for no real gain.
Challenge Mode
When you complete the game, you will gain the option of playing in Challenge Mode. This is a higher difficulty level play through, but you will keep all of your Nanotech, weapons, armor, gadgets, and bolts when you start. In addition, you can buy Mega and Ultra Upgrades to your already upgraded weapons. These upgrades will boost the amount of ammo and strength of the weapon. Upgrading the weapons you use most heavily as quickly as possible will make playing Challenge Mode much more manageable.