Žagarė was the only place in this region to be blessed with a natural waterfall, which was formed by a break in the earth's crust. Millions of years ago, tectonic movements deep beneath the earth's surface caused a crack to appear near the current dam. The sand and silt that filled the depression of the collapsed eastern block after the last ice age were washed away much more easily and quickly by the waters of the Švėtė River than the dolomites of the western block. This resulted in the formation of a waterfall. At first, the force of the waterfall, and later, after the construction of a dam with an arch bridge in the Švėtė valley, was harnessed by man to power a powerful hydro turbine. It turned the millstones, an electric generator, a sawmill, and a forge. A concrete dam was built in the 20th century, which the locals call "bliūdas" because of its appearance.