In the Fishing Competition you have to go to the fisherman at the river just outside the wall of Freedom Harbor close to the Kindred party area.
When you start, you will be given a fishing pole and will have 30 minutes to catch as many fish as possible and turn them in. You will get fishing medals for doing this, and for every 30 medals you earn you will also get a Scroll of Sages and bonus XP. At very high quantities it is possible to unlock special titles. Each fish you catch will take up a standard inventory space, so make sure you have room available. Also make sure to have your pet out and combat ready.
- Junk item
This could be seaweed, some old boots, or some other useless crap. Toss it the moment you get it; it's worthless and just taking up inventory space.
- Usable item
This could be a purple hunting gem, a scroll, or any number of other items.
There are several kinds of fish you could catch, each of which is worth a certain number of fishing medals. Black Carp are worth 1 medal each, Multi-Headed Fish are worth 2, Hydrophilic Fish are worth 5. Once you have caught some fish and talk to the fisherman, you can turn in all of a particular type of fish at once. However, if you happen to have 1 each of a Black Cod, Multi Headed Fish, and a Hydrophilic Fish, you can turn in this combination for a total of 10 medals, 2 more than the fish are individually worth, so try to save up for this. The Hydrophilic Fish are quite rare though.
- Predatory Crab
Occasionally you will catch this instead. A small crab will appear and will start attacking you. Fortunately this does not interrupt your fishing, but the damage can definitely build up if you don't deal with them. Get your pet to attack them immediately; you are definitely better off if there are several people also doing the competition with you and they have their pets out.