Stone fish - crochet. Pretty sure these were inspired by Margaret Oomen's work. Beautiful. Tutorial here: http://www.resurrectionfern.typepad.com/resurrection_fern/2009/05/lets-make-fish-a-tutorial-for-making-a-merfish-necklace.html
If you have done this correctly this round will curl inwards a little appearing like a low basket. Time to slip your stone inside the basket. The remainder of the pattern is worked with the stone inside. This is my favorite part of covering smooth stones.