Daggermouth was supposedly a man-eating bluefish. Seamus warns Peter Griffin that the fish killed his friend, Salty, another fisherman. There was a $50,000 reward for killing the creature, offered in "A Fish out of Water".
However, Peter and his friends discover that Daggermouth is actually a "sophisticated talking robot" created by Salty himself, to generate a demand for merchandise. Salty gives Peter $50,000 in hush money, to which Peter then uses to pay Jim's Bank in order to retire the mortgage on his house and gain the title to the S.S. More Powerful Than Superman, Batman, Spider-Man, and the Incredible Hulk Put Together.
At the end of the episode, it is revealed an animated sitcom loosely based on Daggermouth was picked up by Nickelodeon, called Daggermouth and Boom Boom in which the fish is paired with an effeminate cat, named Boom Boom.
Salty's own question, as to how a fisherman with no engineering background created such a sophisticated robot, is left unexplained.