Use Obsidian Chips and/or gem fragments to make Obsidian arrow heads or magic imbued arrow heads. These arrows would be considerably more expensive if you used a ratio of 1 fragment or chip to 1 arrow. The Obsidian ones would operate similar to Obsidian weapons. The magic imbued ones could have added damage or effect based on the type of fragment used. For example, using a sapphire fragment to make an ice arrow may tack on an added slowing effect, or using an onyx fragment to make a death arrow may cause some necrotic disease effect, sapping one's strength. As it stands now, the only practical use of chips and fragments are to sell them off to the npc, this would give them a purpose. The extreme cost over normal arrows could counterbalance any concerns of making ranged attacks over powered.