Passage 2.16.3
καὶ Ἀκρισίῳ μὲν ἡ πρόρρησις τοῦ θεοῦ τέλος ἔσχεν, οὐδὲ ἀπέτρεψέν οἱ τὸ χρεὼν τὰ ἐς τὴν παῖδα καὶ τὸν θυγατριδοῦν παρευρήματα· Περσεὺς δὲ ὡς ἀνέστρεψεν ἐς Ἄργος---ᾐσχύνετο γὰρ τοῦ φόνου τῇ φήμῃ---, Μεγαπένθην τὸν Προίτου πείθει οἱ τὴν ἀρχὴν ἀντιδοῦναι, παραλαβὼν δὲ αὐτὸς τὴν ἐκείνου Μυκήνας κτίζει. τοῦ ξίφους γὰρ ἐνταῦθα ἐξέπεσεν ὁ μύκης αὐτῷ, καὶ τὸ σημεῖον ἐς οἰκισμὸν ἐνόμιζε συμβῆναι πόλεως. ἤκουσα δὲ καὶ ὡς διψῶντι ἐπῆλθεν ἀνελέσθαι οἱ μύκητα ἐκ τῆς γῆς, ῥυέντος δὲ ὕδατος πιὼν καὶ ἡσθεὶς Μυκήνας ἔθετο τὸ ὄνομα τῷ χωρίῳ.
For Acrisius, the god's oracle had its fulfillment at last; neither his precautions nor the devices he managed against his daughter and grandson could avert fate. When Perseus returned to Argos, ashamed because of the rumor of the murder, he persuaded Megapenthes, son of Proetus, to exchange kingdoms with him. Taking Megapenthes' kingdom, he founded Mycenae. For here the chape (mykes) had fallen from his sword, and he believed this sign to be an omen for establishing the city. But I have also heard another account: that when Perseus was thirsty, he happened upon a mushroom (mykes) growing from the ground, and plucking it, water immediately gushed forth. Having drunk from it gladly, he was pleased and thus gave the place the name Mycenae.