It is caused by a fungus that started in the middle and is working its
way out, the mushrooms are the outer indication of the fungus. You will
also notice that the grass closest to the ring is greener than
everywhere else, this is due to the release of nitrogen by the fungus
which eventually results in its demise.
Fairy ring is short lived and relatively harmless, but unsightly. A
single application of fungicide will stop it in its tracks and the area
will heal shortly.
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