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In the Ultima saga, it seems more than one Tree of Balance existed. One such tree was Elerion, situated on the world of Pagan, which the Avatar visited during the time of exile by the Guardian in Ultima VIII. Serpent Isle also had a Tree of Balance, but it died when Ssithnos, the last Great Hierophant of Balance, was murdered.
A Tree of Balance can produce an acorn, a Silver Seed, only once every hundred centuries. From this seed can grow a new tree.
Elerion was destroyed when the Guardian and his Titan minions laid waste the world of Pagan, although one caretaker of the tree, Morghrim, managed to escape via magical means to Serpent Isle with a single Silver Seed from Elerion. However, its passage through the chaotic magics of the Void corrupted the seed after it had ruptured, rendering it sterile, and thus unable to produce a new Tree of Balance.
Fortunately, the Avatar, on a quest to the past of Serpent Isle in Ultima VII Part Two, was able to locate a second Silver Seed, and thus restore the Tree of Balance to its former state.
It is not known at this time if this seed was a product of Elerion brought from Pagan at an earlier time, or an example already present on New Sosaria. It's most likely the seed the Avatar finds was a product of Serpent Isle's own Tree of Balance, kept safe against the day it would be needed.
Given the lengths the Guardian went to in order to destroy Elerion, this is a good explanation as to why the Dark Monks are involved in the plotline of the Silver Seed: had they gotten their hands on it, they would have surely destroyed it.
- Some might wonder what purpose the planting of the Seed serves for the story since nothing happens in future afterwards. Most do the planting well before the Banes are released, since the sooner the powerful items of past have been acquired, the easier the game is afterwards. But if the Seed is planted after the Banes have been released, Karnax mentions that the Tree of Balance will bring all the people killed by the Banes back to life again after Balance is restored. This solution provides a nice restoration for the cut/alteration made to the original plot of the Serpent Isle.