the narrator meets zadok, who explains that an innsmouth merchant named obed marsh discovered a race of fish-like humanoids known as the deep ones. when hard times fell on the town, obed established a cult called the esoteric order of dagon, which offered human sacrifices to the deep ones in exchange for wealth in the form of large fish hauls and unique jewelry. when obed and his followers were arrested, the deep ones attacked the town and killed more than half of its population, leaving the survivors with no other choice than to continue obed's practices. male and female inhabitants were forced to breed with the deep ones, producing hybrid offspring which have the appearance of normal humans in early life but, in adulthood, slowly transform into deep ones themselves and leave the surface to live in ancient undersea cities for eternity. he further explains that these ocean-dwellers have designs on the surface world and have been planning the use of shoggoths to conquer or transform it. zadok sees strange waves approaching the dock and tells the narrator that they have been seen, urging him to leave town immediately. the narrator is unnerved, but ultimately dismisses the story. once he leaves, zadok disappears and is never seen again.