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I have collected a couple of water candles from the Dungeon biome and since reading the item description and the wiki article about it I realise that may have been a bad idea:

Holding this may cause unwanted attention.

However, now that I have bought them back to my spawn point, I was wondering if there are any bad effects of using them as a light source in my home?

water candles in the home

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Yes. Water Candles increase the monster spawn rate by 33% and increase the maximum number of spawned monsters by 50% when it's placed near you, or you're actively holding it. Merely having it in your inventory doesn't do anything.

The Water Candle was broken before the 1.0.4 update, though; its effect was instead attributed to the Band of Regeneration. This is no longer the case.

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    By the way, if you find yourself doing switch statements like this (like this probably was originally), you probably want to use polymorphism instead :)
    – BlueRaja - Danny Pflughoeft
    Commented Jun 4, 2011 at 3:17
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    Just as a sidenote: Decompiling and reverse engineering of Terraria is forbidden by the ToS.
    – Bobby
    Commented Jun 4, 2011 at 18:05
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    Another note about your math (sorry): decreasing the spawn-delay by 25% is not the same as increasing its inverse (the spawn-rate) by 25%. It actually increases the spawn-rate by 33% (because multiplying the spawn-delay by 3/4 is the same as multiplying its inverse by 4/3). For example, if the spawn-delay were originally 1-second-between-monster-spawns, and we decreased that to 0.75-seconds-between-monster-spawns, then after 100 seconds, we originally would have had 100 monsters, but with the new spawn-delay we'll have 133 monsters, a 33% increase.
    – BlueRaja - Danny Pflughoeft
    Commented Jun 4, 2011 at 22:51
  • Actually, delay may not have been the right word. A random number between 0 and spawnRate is rolled, and if that number is 0, an NPC spawns. By default, that's 1/701; after this adjustment it would be 1/526. So, the higher the spawn rate, the higher the delay, on average, between spawns.
    – a cat
    Commented Jun 5, 2011 at 9:57
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    As of 1.2, placed candles also affect spawnrates and max spawns.
    – Once Upon a Dev
    Commented Oct 25, 2013 at 9:04
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If there are enough NPCs in your base, having a water candle in it is actually a good idea. NPCs prevent enemies from spawning, so the water candle will increase the spawn rate of critters such as fireflies, Butterflies, Squirrels, and Rabbits.

The only time it is a bad idea to have a water candle in your base is during Blood Moons and Solar Eclipses, where it actually will affect the spawn rate of enemies. It does not affect the Pumpkin Moon, Frost Moon, Pirate Invasion, or Goblin Invasion spawn rates. I would note, though, that once you have good enough gear, it might be advantageous to have higher spawn rates during these events to increase the chances of getting a drop or to get more money.

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