In episode 3 of "Nanatsu no Maken ga Shihai suru," the story unfolds in a tense environment where the characters find themselves confronting two threatening figures, Rivermoore and Salvadori Succubus. The situation escalates when Salvadori Succubus employs a unique form of magic to give birth to a creature that spreads panic and chaos.

Amid the turmoil, Nanao, one of the main characters, steps forward to protect her companions, showcasing her impressive combat skills. However, the situation intensifies when Alvin Godfrey, the student council president of Kimberly, intervenes to ensure the safety of the new students. He is accompanied by Carlos Whitrow, a fifth-year prefect, who also helps defuse the situation.

After this encounter, the group is introduced to the concept of "Shiawase," a term used in their combat school to describe a fair fight between opponents who respect and accept each other, with no hostility between them. Nanao reveals that she seeks this "Shiawase," but her approach is death-oriented, which raises concerns among her friends.

Nanao's friends, especially Oliver, Chela, and Katie, express their concern for her and encourage her to find a new way of life, emphasizing the importance of valuing the life and relationships she has built. Moved by their words, Nanao promises to change her attitude and asks them for advice on how to learn to live her life in Kimberly.

The episode ends with a challenge issued by Mr. Andrews to Oliver and Nanao, setting the stage for a potential duel in the future.