December 28, 2025: While having breakfast, Suguha relays to her brother Kazuto a news article on a gaming website: in ALO, the legendary "Holy Sword Excalibur" had been located. Kazuto recalls when they found the sword months before when he and Leafa found themselves trapped in Jotunheimr: they found a monster being attacked by a four-armed giant that Leafa took a liking to and helped rescue. While the monster, whom she would name "Tonkii", flew them back to Alfheim, it passed by a labyrinth that contained Excalibur. Looking back now, Kazuto theorizes that Tonkii wanted to show him the sword so that he could claim it.
After breakfast, they log into ALO and meet up with their friends: Asuna (playing as an Undine), Silica (Cait Sith), Lisbeth (Leprechaun), Klein (Salamander), and Sinon (who converted from GGO and now played as a bow-wielding Cait Sith). As they stock up on supplies and repair their weapons, Yui informs them that a "slaughter quest" was ongoing in Jotunheimr, with players hunting down monsters in the hopes of being rewarded with Excalibur. With little time to lose, the party takes a shortcut to Jotunheimr, where Asuna bestows a cold-resistance buff and Leafa calls upon Tonkii.
While en route to the labyrinth, the party witnesses other players aiding the four-armed giants in slaughtering members of Tonkii's race. They are then approached by an NPC, the "Queen of the Lake" Uror. Unlike other Non Player Characters, as Yui would explain, Uror was connected to the language engine model of the Cardinal system that runs ALO, making her closer to an artificial intelligence than a simple NPC.
Uror tells them of how the King of the Giants, Thyrm, threw Excalibur into Jotunheimr's lake, cutting it off from the World Tree Yggdrasil and changing the once vibrant realm into a frozen wasteland. Thyrm tricked other players into hunting down Tonkii's kinsmen in exchange for Excalibur (an offer he would not honor, for he would give them a cheap imitation sword). His goal is to destroy all of Tonkii's kinsmen, in doing so rendering Uror helpless to stop his invasion of Alfheim. The only way to stop him would be to retrieve Excalibur from the labyrinth, Thyrm's castle, "Thyrmheim".
She bestows upon Leafa a medallion that would inform them of how long they had until Tonkii's race was hunted into extinction, thus initiating the quest "The Holy Sword of the Ice Palace".