In the first [account of the Second Age (The Rings of Power)] we see a sort of second fall or at least ‘error’ of the Elves. There was nothing wrong essentially in their lingering against counsel, still sadly with the mortal lands of their old heroic deeds. But they wanted to have their cake without eating it. They wanted peace and bliss and perfect memory of 'The West’, and yet remain on the ordinary earth where their prestige as the highest people, above wild Elves, dwarves, and Men, was greater than at the bottom of the hierarchy of Valinor. They thus became obsessed with 'fading’, the mode in which the changes of time (the law of the world under the sun) was perceived by them. They became sad, and their art (shall we say) antiquarian, and their efforts all really a kind of embalming–even though they also retained the old motive of their kind, the adornment of earth, and the healing of its hurts. … There arose a friendship between the usually hostile folk (of Elves and Dwarves) for the first and only time, and smithcraft reached its highest development. But many of the Elves listened to Sauron. He was still fair in that early time, and his motives and those of the Elves seemed to go partly together: the healing of the desolate lands. Sauron found their weak point in suggesting that, helping one another, they could make Western Middle-earth as beautiful as Valinor. It was really a veiled attack on the gods, an incitement to try and make a separate independent paradise. Gilgalad repulsed all such overtures, as also did Elrond. But at Eregion great work began–and the Elves came their nearest to falling to ’magic’ and machinery. With the aid of Sauron’s lore they made the Rings of Power….
–J.R.R. Tolkien, The Letters of J.R.R. Tolkien, 131 (Art by Angus McBride)
Ost-in-Edhil was founded by GaladrielandCeleborn, before the time they ruled Lothlórien. The Elves began trading with the DwarvesofKhazad-dûm and built a large road to connect the city with the West-gate of the Dwarven kingdom. The Elves of Eregion also traded with the MenofNúmenor. After the Númenóreans founded the city of Tharbad to the south of Ost-in-Edhil, Galadriel is recorded meeting with Aldarion before he took up the Sceptre.
In time the Gwaith-i-Mírdain, a brotherhood of Elven craftsmen, was founded. They were led by Celebrimbor, the greatest smith since Fëanor. Sometime after S.A.1350 Galadriel left for Lórien and Celebrimbor became Lord of Ost-in-Edhil.