Loki had always been more of a burden than a help to the other gods and goddesses. But after his contriving the death of Baldur and ensuring that that fair god would remain in the underworld until the cosmos is destroyed during Ragnarok, he went about slandering the gods at every opportunity. At last, the gods decided that his abuse had become too much, and they went to capture him.

Loki ran far away from Asgard. At the peak of a high mountain, he built for himself a house with four doors so that he could watch for his pursuers from all directions. By day he turned himself into a salmon and hid beneath a nearby waterfall. By night he sat by his fire and weaved a net for fishing for his food.

The far-seeing Odin perceived where Loki now dwelt, and the gods went after him. When Loki saw his former friends approaching, he threw the net in the fire and hid himself in the stream in his salmon form so as to leave no traces of himself or his activities. When the gods arrived and saw the net smoldering in the fire, they surmised that the wily shapeshifter had changed himself into the likeness of those he intended to catch for himself. The gods took up the twine Loki had been using and crafted their own net, then made their way to the stream. Several times they cast their net into the stream, and each time the salmon barely eluded them. At last, the fish made a bold leap downstream to swim to the sea, and while in the air he was caught by Thor. The salmon writhed in the war-god’s grasp, but Thor held him fast by his tail fins. This is why, to this day, the salmon has a slender tail.

Loki was then taken, in his regular form, to a cave. The gods then brought in Loki’s two sons and turned one into a wolf, who promptly killed his brother, strewing his entrails across the cave floor. Loki was then fastened to three rocks in the cave with the entrails of his slain son, which the gods had turned into iron chains. Skadi placed a poisonous snake on a rock above his head, where it dripped venom onto his face. But Loki’s faithful wife, Sigyn, sat by his side with a bowl that she held up to the snake’s mouth to catch the poison. But every so often, the bowl became full, and Sigyn would have to leave her husband’s side to dispose of its contents, at which point the drops that fell onto the unrepentant god’s face would cause him to shake violently, which brought about earthquakes in Midgard, the world of humanity. And this was the lot of Loki and Sigyn until, as fated, Loki will break free from his chains at Ragnarok to assist the giants in destroying the cosmos.[1][2]

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References:

[1] The Poetic Edda. Lokasenna.

[2] Snorri Stulruson. The Prose Edda. Gylfaginning 50.