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Given to Oren for the Zora's Flippers
The Smooth Gem is an item found in A Link Between Worlds. It was stolen from the Zora Queen Oren by a Shady Guy.
The Smooth Gem apparently keeps the power within Oren under control. If Link returns the Smooth Gem to her, she will reward him with the Zora's Flippers.
After being stolen by the Shady Guy, the Smooth Stone can be found being sold by the Street Merchant in Kakariko Village for 200 rupees.