Scene one

Sadko finds himself at the feast in a rich house of the Novgorod merchants’s guild. Guild leaders order a song in praise of heroic deeds. Nezhata, a young guslar, sings for them. Unable to hold his tongue at the table, Sadko admonishes the merchants for their clinging to the antique traditions and vain boasting. Affronted by Sadko’s accusations, the merchants angrily banish him from the feast.

Scene two

Sadko comes to the shore of Lake Ilmen. Surprised to see a beautiful girl appear there, he desperately tries to find out her identity. The girl reveals her secret to him: she is Princess Volkhova, the youngest daughter of the Sea Tsar and Tsarina Hydraqua. Her beauty enchants Sadko into total oblivion. Volkhova promises to help Sadko and tells him about the three magic goldfishes he will capture once he goes fishing in Lake Ilmen with his net. These fishes will make Sadko rich and prosperous.