The blood of the elves was something extraordinary. It had properties, even the gods weren't aware of until one of them started experimenting on them. Mimir, who was known as the great god of knowledge, was the first one to slay the pure elves who at the time were treated as creatures with no sin or to be precise, they didn't know of what sin was.
One could say making the elves were the gods reattempt to make a docile, honest, and trustable species of followers who would never betray them and their beliefs. Just like they had attempted to do so while reseeding the Earth after the events of Ragnarok.
However, unlike their failure with humans, this time they were able to preserve the innocence of the elves and taught them only the necessary things. Like how to populate themselves and how to advance in science. However, Mimir was blinded by his thirst for knowledge.