Squid says hello to the viewers while looking over the ocean from the ruined floating castle. Meanwhile, Stampy (in duck form) is in the farm, harvesting and planting some wheat. He says that he is using for bread. Squid tells him to throw it in the water for soggy bread. However, Stampy doesn't want to because as he saw from the last episode, water and ducks don't mix. Squid says that water and ducks do mix, but not for rubber ducks. They climb up a ladder and look through the balcony at the ocean, and see more Pirate Ships. Squid wonders why there is no loot in the castle. Stampy says that he found a lot of loot in the houses, but none where you'd expect them to be. Squid says that there is however one plus to arriving at the castle-they have now crafted a lot of bread, thanks to the wheat found in the farms. Squid tells Stampy that he didn't find anything in the basement either. Squid explores the castle's corridors, while Stampy falls into the water again. However, Squid does find some mushrooms in the corridors, which he wants to use for stew. Squid says that the only good thing about the castle is that there are pumpkins. However, Squid spots a "Loch Ness Monster" out the balcony. He jumps off the castle and swims towards it, and it is revealed to be a Sea Monster from Orespawn, and it has a big boss health bar.
The monster starts attacking Squid, and nearly kills him with three blows. Squid goes underwater and "tickles his belly" with an axe. The monster bites Squid one more time, and Squid is at his lowest health bar. The monster chases after Squid, while opening and closing its mouth, because it wants to eat Squid. Meanwhile, Stampy arrives on a boat to rescue him. Squid then attacks the monster with an enchanted milk bucket that he found in episode 1, and then goes underwater to attack him with the axe. Meanwhile, Stampy goes around on the boat, trying to attack the Sea Monster with his sword. However, as Squid attacks the monster's belly, he drowns and is killed. Moments later, Stampy is killed by the Sea Monster. They both respawn in the starting area from episode 1. They then make each other some boats and go on a quest to get their stuff back. However, their boats glitch out, so Squid quits and logs back in. They then head north to were they died. On the way, Squid finds a Lucky Block and gets a cake from it. Stampy finds another Lucky Block and gets XP from it. As Squid sets out on the ocean, Stampy thinks he found a Lucky Block, but it is a zombie in gold armor. Soon, they arrive at their death point, and they find their stuff. However, Stampy sees the monster, still looking for them. Squid creates a double chest on the island, and stores their stuff in it. He then goes back to get more stuff. When Squid arrives back on the island, Stampy the rubber duck is sitting on the cake. They then play a game of Cake Peek-a-Boo. Squid says that his plans are to build a house and a glider. Soon, they make tools. Squid says that he wants to make a house on a green area with flowers. They then end the episode.