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Agates are usually found as nodules within the cavities of volcanic rocks. These cavities are formed when gasses are trapped within the liquid volcanic material. These cavities are then filled in with silica-rich liquids, depositing layers on the walls of the cavity.
Subsequent layers may include variations of the silica liquids, resulting in layers of chalcedony, often alternating with layers of crystalline quartz, creating the banded agates.