The landlord leads Candide to the house of an old wise man who might be able to answer his many questions about the place. The old man explains that El Dorado is the ancient homeland of the Inca, who “imprudently,” left it to build an empire, which was then destroyed by the Spanish. He explains that El Dorado's happiness comes from its isolation: it cannot be reached by conquering Europeans. Finally, he explains the religion of the country: everyone is a priest, there are no divisions or sects, and all worship consists in giving thanks to God. Candide concludes that Pangloss was wrong about the “best of all possible worlds,” being in Westphalia: if he had traveled more, he might have come to El Dorado, and known better.
El Dorado, as the old man describes it, is the exact opposite of Voltaire's Europe. While Europeans traveled the world and colonized distant places, the residents of El Dorado stayed at home, safe and isolated. While Europe developed complex religious divisions and dogmas all fighting it out for power and influence, El Dorado stuck to the simple religion of giving thanks to God. By setting up El Dorado as opposite to it, Voltaire criticizes the Europe of his time. It is ironic that Candide faults Pangloss for not having traveled more, because staying put is the great virtue of the El Doradans.
The old man sends Candide and Cacambo to see the king of El Dorado. The king receives them like equals: no bows are required. They live, for a month, in splendor and happiness.
This lack of ceremony involved in meeting the king contrasts greatly with the elaborate rituals which surrounded contact with kings in Europe. In El Dorado, it is clear that all men are equals: egalitarianism was one of the chief values of the Enlightenment.
Eventually, however, Cacambo convinces Candide to leave by arguing that in El Dorado, they are only equal to their neighbors: with the wealth they've gained, they could become kings in Europe. Though he thinks that Cacambo and Candide are making a mistake, the king agrees to help them leave, giving them a flock of red sheep, and letting them take as much gold as they want.
Despite the perfectness of El Dorado, or perhaps because of it, Candide and Cacambo decide to leave. Their motivation for leaving is pride: they see the opportunity to set themselves over others. This resembles the exile from Eden in the Bible: the serpent tempts Eve by promising equality with God. And it offers a critique of any perfect society. Namely, that no society ever could be perfect because men are so far from perfect.