There are so many fascinating revelations about Chuuya’s character in these episode.

Chuuya and Dazai beat down the group of men that confronted them during the previous episode. In the pocket of one of them, Dazai finds information that they got orders to form a fake explosion of black fire. To pin the death of their informant on the angry spirit of the previous boss, and bring conflict to the Port Mafia.
Inside the house, they find their informant still alive and question him about the time he survived his brush with Arahabaki. He recounts his memory of the situation, though he says that it had nothing to do with the previous boss at the time he witnessed it. What he saw instead, was a demon formed of pure power.
It’s obvious to the viewer that what they are seeing is a creature that is very similar to Chuuya’s appearance when he releases the control on his ability, to ‘corruption’.

Dazai and Chuuya step back for a moment to gather themselves, they both know the truth of the situation now or at least. Know enough to make an educated guess, so while they are taking a break, they go to an arcade and play a game with a bet that the loser will take one order from the other without question.
While they are at the arcade, a few members of Chuuya’s gang that hadn’t been captured and held captive by the Port Mafia come in. Things get tense as Dazai reveals that Chuuya is working with the Port Mafia, and plays a power move in having Mori release the captured members of the Sheep.
In theory, Chuuya could of stepped out of this situation now and gone on living his life with the Sheep. However, this had become personal to him and there were things he just had to find out. So he moves out with Dazai to confront the person behind the explosions and the phantom of the ‘previous boss’.

The culprit? Was their informant, Port Mafia member Rondou. His ability could create a subspace and in that subspace he could keep one corpse and use it as a supernatural being. As for Arahabaki, it was exactly as I thought. The god of calamity exists inside of Chuuya Nakahara.
The question is, before 8 years ago, did the human known as Chuuya Nakahara exist? Or is he a construct of Arahabaki to give itself a place to conceal it’s powers?

Chuuya and Dazai face down against Randou and win, they discover he was a foreign agent sent to take Arahabaki from the Japanese military. He was betrayed by his partner at the last moment, and as a result, they got cornered and then Arahabaki exploded and unleashed it’s powers. Seemingly killing everyone but Rondou, though that isn’t his name. Merely a mistranslation from the hat he was wearing, his true name was Arthur Rimbaud.
Arthur dies and Chuuya and Dazai part ways, hopefully to never see each other again or so Chuuya hopes. However, life isn’t that kind to him.

He’s attacked by his own gang, in fear of him joining the Port Mafia. The sheep can’t afford to have someone that powerful falling into the hands of the Port Mafia, so the sheep team up with the military to go against the mafia. Chuuya crumbles a cliff to get away and when at the bottom he meets with Dazai. Who talks him into joining the Port Mafia in exchange for letting the members of The Sheep live, while taking out the military people.
“Spare the kids.”

So Chuuya joins the Port Mafia. He goes to speak with Mori, and Mori uses two things to keep Chuuya with him. First, he has files on Arahabaki that only executives can see and that’s why Chuuya wants to see more then anything. On top of that, he tells Chuuya exactly what it is that he believes a leader is.
Chuuya swears his life to the Port Mafia and inherits the hat that Rimbaud left behind. Which is the icon hat that Chuuya is always seen wearing throughout the rest of the series.

Ozaki asks Mori if it is truly wise to have Chuuya and Dazai, who so clearly hate one another in the same organization to which Mori responds. “Only a diamond can polish a diamond.” which is something he learned from his own mentor and wanted to put into practice.
A small epilogue follows with Ando writing up the report saying that this is how Chuuya joined the Port Mafia and that Rimbaud’s partner was not in fact dead. It’s basically a segway into Dead Apple, since this light novel was given away at the movie release in Japan.

Now that we have the light novel out of the way, we should be looking at moving into season 3 proper starting next week. I can hardly wait!