Clay can be used as a medium as long as it's settled down.. but fish is sure to pick at it and churn up the water.. I would buy a fresh pack of water lily clay if I were you. If you recycle yours.. it might have some fertilizer or some other stuff packed into the clay leaching into the water and killing your fish. I've no problems with fish and clay.. they seem extremely healthy even when put in a tank that you can't see nuts in. It's non toxic but small particles might clog up the gills if it's been murky for too long. Ammonia even in small amounts is toxic. It should read 0.

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