When you place an axolotl somewhere it places with water of course. But when you pick up the axolotl the water stays placed and if you place the axolotl somewhere it also places with a water block therefore making infinite water.
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We're tracking this issue in MCPE-40692, so this ticket is being resolved and linked as a duplicate.
That ticket has already been resolved as working as intended, which means this is not considered a bug and won't be fixed. Please do not leave a comment on the linked ticket.
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