Mudskipper hides are given to Nung, at the Mogre Camp, when Freeing Pirate Pete in Recipe for Disaster, in order to gain access to the crab pen.
The hide is a drop from mudskippers. Contrary to popular belief Mudskipper hides are not used to create Mudskipper hats or Flippers, you must kill a Mogre to obtain these items.
If taken out of water a message appears saying "The Mudkipper Hides all dry out and crumble on contact to air."
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