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At the start of Chapter 4, Mario and co. discover that they require a Space Helmet in order to properly traverse the depths of Outer Space in search of the next Pure Heart. Following the advice of Merlon, they go to ask for the return of a Goldfish Bowl the elder had given away recently to Pook, who explains to them that Captain Gills has apparently been growing larger and larger each day, so much so that even the goldfish bowl has grown too small to accommodate him. He agrees to give them the bowl to use as a helmet provided that they find a proper environment for his goldfish to live in first.
In order to release Captain Gills, the player must bring him to the first basement floor of Flipside, near a bar known as The Underwhere, where the goldfish bowl can be emptied into the canal that is located there. From then on, Captain Gills will take up residence in the lowest portion of the canal, where he continues to grow in size with each passing chapter. It is also implied that he becomes carnivorous during this time, as a few skeletons of other fish can be seen in the canal in 2D and several more if Mario Flips into 3D.
Following the end of the game, the player can return one last time to the canal to discover that Captain Gills has somehow been gifted with five children of his own - Tiptron credits the Stork with how they came to be. He has apparently raised all of his children to be carnivores like him.