The Wavedancers, in a world of their own, are forced to the surface by the tides of change as two tribes are brought together by Recognition.
(The Discovery 1-4)
Several years have passed since the Wolfriders and Sun Folk took the Palace to live in the Wolfriders' ancient Holt of “Goodtree's Rest.” Cutter's son Sunstream (formerly Suntop) has been wrapped in a Preserver cocoon for three years, absorbing magical power so he can fulfill his dream of being able to Send to any elves anywhere in the world and connect them all to each other. Timmain has been training the Sun Folk in how to control and use the Palace's magic.
Far away from the Holt dwells a tribe of sea elves called the Wavedancers, who live on a coral reef called Crest Point. Within his cocoon, Sunstream's spirit often leaves his body (astral projection), and in one of these times, he encounters the spirit of a Wavedancer named Brill, whose spirit often leaves her body unbidden when she is asleep. Their two spirits have spent much time together and they have fallen in love. Brill had kept this a secret from her tribe, but when a discussion comes up about how difficult it is for the Wavedancers to always be living in fear of and hiding from humans (who have killed many of their tribe over the years), she decides the time is right to reveal to them the fact that other elves exist in the world, and that perhaps they could join forces.
One of the Wavedancers is called the “Broken One,” an elf who in one of his wanderings, thousands of years prior, had encountered Winnowill when she lived under the ocean. Winnowill attacked him, shattered his mind and changed his body into a hideous monstrous form. The Wavedancers' chief, Snakeskin, is a healer, and along with another healer in the tribe, they attempt to heal the Broken One (although they do not know how he became the way he is). Snakeskin's father Surge angrily interrupts them because he disagrees with the healing; he feels that the Broken One should remain as he is to serve as a warning of the dangers of the world beyond Crest Point. (Surge had disappeared for a time and abandoned his chieftainship after his lifemate died, but since his return has still tried to hold sway over Snakeskin and the tribe.)
Sunstream's spirit visits Ember at her tribe's home of Howling Rock (see Wild Hunt for their story); Ember can tell that he has fallen in love and teases him. Sunstream's spirit then goes to visit Brill, and at the end of that meeting, they suddenly Recognize each other. The force of the Recognition propels Sunstream's spirit back into his body, and he sends to Cutter to cut him loose from the Preserver cocoon. Sunstream joyfully reunites with his family and friends, who see that he became much taller while in the cocoon.
Brill and Sunstream tell their respective tribes about the Recognition. Cutter happily prepares to take the Palace to Crest Point to meet Brill and her sea elf tribe. However, the untrusting and fearful Surge tries to convince the Wavedancers that they should abandon Crest Point and flee because the strange elves might capture them in the Palace. Surge has heard the Broken One rambling about a “pah-lasss” that will capture them and take them away to the stars, and his fears are borne of this warning. His chief-son Snakeskin disagrees and believes they should give the Palace elves a chance, and Surge reclaims the chieftainship, threatening to kill himself if Snakeskin doesn't back down; Snakeskin gives in and swims away. Brill, her twin sister Krill, and two others refuse to follow Surge and are determined to wait at Crest Point for the Palace to arrive. Surge, who has the power to control water, agrees to let them stay and then sweeps the other Wavedancers away with him with a forceful water current before they have a chance to make their own decision.
The Palace arrives and settles in the ocean near Crest Point. Brill and Sunstream finally meet face to face and go off by themselves to fulfill their Recognition, while the other four Wavedancers get acquainted with the elves in the Palace. They also meet the human Shuna, who amazes them because they have always believed all humans to be nothing but killers.
The two chiefs Cutter and Snakeskin like each other at once, and Cutter is convinced that Snakeskin is the rightful chief of the Wavedancers, not Surge. The Wavedancers in the Palace decide to send to the other Wavedancers to convince them to visit the Palace; the others start swimming for the Palace and away from Surge, but Surge again creates a powerful water current to prevent them from going in. However, the Sun Folk under Timmain's guidance re-shape the Palace to engulf the trapped Wavedancers and rescue them from Surge's water current. Surge swims up to the Palace and is confronted by Cutter, Snakeskin and others. They try to convince him that the Palace is safe, but he does not believe even their sendings. He suddenly pulls Cutter out into the ocean and tells the other elves that he will kill Cutter if the Wavedancers don't leave. The spirit of the elf Zhantee comes to Cutter's aid with his shielding power so Cutter can breathe underwater, and Surge takes him down to an underground cave to hold him captive until the Wavedancers leave the Palace. Cutter continues to try to reason with him.
In the Palace, the elves try to think of a way to solve this dilemma, and Snakeskin decides that he must challenge his father one-on-one. He and his father battle under the water, and Surge starts to send a deadly water current at him but at the last moment realizes he is about to kill his own son, and redirects the current - unfortunately, it goes right toward the coral reef, which starts to fall apart.
During this time, Cutter has been in the cave with the Broken One, and realizes from the Broken One's rambling that it was Winnowill who made him the way he is. When the coral reef starts to break apart, Snakeskin tries to rescue Cutter and the Broken One but is hit by falling coral rock. Surge swims in and rescues them, but is killed in the process. Cutter, Snakeskin and the Broken One manage to reach the palace, and the Wavedancers grieve for Surge and the loss of their coral reef home.
Over the next few days, the Broken One is mostly healed by the powers of three healers and the Palace's magic and restored to his original elfin body as his old self, Reef. Snakeskin is able to commune with Surge's spirit and they are reconciled. Sunstream has his body temporarily re-shaped to be able to breathe underwater while he spends time with Brill. He and Brill ultimately decide to live apart but commune and visit each other through the Palace. The Wavedancers depart to seek a new sea home.
The human Shuna accepts a marriage proposal from her friend Ikopek, who had fallen in love with her when she first visited his human tribe (see “The Searcher and the Sword” section for their story). The elves celebrate all the new unions and alliances in the Holt.
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