Deviant ID

for basic blending, look at the bottom of the layers window and look for a box with a circle in it - should be 3rd icon from the left

grab the eraser brush and choose one with soft edges and of a fairly large size, change the opacity down to let's say 30% and start erasing away - clicking more times the nearer you get to the edge. an alternative is to select the outline of the object using polygon lasso tool / lasso tool or even pen tool then while it is selected, go to select --> refine edge and play around with the settings there

good luck