The Norse gods were not all-powerful.

They had fearsome enemies in

Loki looked like a god, he had the gifts of a god and the mind of a god, but
his heart was elsewhere: it was with the giants, for was he not a giant at
least in part by blood? And did he not have a home in Jotunheim, the cold,
desolate and blasted Land of the Giants? I wouldn’t have liked to live there,
and I don’t know anyone who would. As for Loki, although he had in
Asgard a lovely wife, Sigyn, who was faithful to him to the end of days, in
Jotunheim he had another family altogether. There his wife was a beastly
giantess, and his children? Oh, it is better not to think about them. But if
you must, there was Hel, who turned people to stone – only the gods were
safe from her; the Midgard-Serpent, who was a horrible reptile, worse even
than Fafnir the dragon, and who doubled in size every single day; and last,
but not least, the cruel Wolf, Fenris, who was always hungry, and whose
jaws were immense and whose pointed teeth were as sharp as swords.
Imagine keeping that lot in order at dinner! And these children of Loki’s
just kept on growing…
One day Odin was looking around the world with his Eye – there was a
lot to see – and although Odin was very wise, that was only after he had
looked. As I said, Odin was looking around the world, and his Eye fell
upon Loki’s home in Jotunheim, and he saw Loki’s terrible children. He
saw how strong and powerful they were getting, and what dreadful
trouble they would eventually cause, and he sent Thor and Tyr and some
of the other gods to fetch them to Asgard.
I would never have brought them to my home, but perhaps Odin wanted
to keep his Eye on them. However, this was not the reason, for Odin cast
Hel down into the underworld. (As the people there were dead anyway
he thought she couldn’t do anymore harm). He flung the Midgard-
Serpent into the seas where it stayed growing ever bigger, and it was
only the wolf, Fenris, that he kept in Asgard – because if the truth be
known, he did not dare take him on directly.
Fenris was a strange and difficult pet – there is no doubt about that. He
roamed freely about Asgard, frightening the goddesses. He scared even
Odin, for Odin knew that in the Last Battle, it was his destiny to be
destroyed by Fenris. One evening, some of the gods were too frightened
to come to the Council Chamber as it meant passing Fenris who was
snapping his huge jaws in the doorway, Odin decided it was time to act.
He opened up another passage into the chamber. When the gods had all
come in, he closed the door. “What a mistake we have made,” he
bemoaned, “to feed and pamper this wolf, who is already our enemy, so he
grows ever stronger? No, we must find a solution. We cannot kill him, for
we can have no bloodshed here.”
“Chain him up, that’s what I’d do,” said Thor.

“Yes, but how? How will we find a chain strong enough to hold such a
creature?”
“Leave that to me,” said Thor, always a god of action. That night Thor
worked away with his great hammer, and the other gods helped him. In
the morning, all admired the thick chain with its complex links that
gleamed in the sunshine.
Odin spread out the chain and put some meat high up on a tree. The gods
called Fenris, spread out the chain, and asked him to show his wonderful
strength by breaking it. “Then you can have the meat,” they promised.
Fenris looked at the chain, and sniffed the meat. The wolf knew how
strong he was, and that breaking the chain would not be a problem for
him, so he agreed to be bound, and his feet were tied together so it
looked as if they were to stay like that always. But the gods smiled too
soon. The wolf flexed himself, snapped the vast chain, and was free once
more. Reluctantly, Odin nodded, and Tyr gave Fenris the meat.
The wolf sloped off. “He has grown terribly strong,” said Odin, looking
at the chain in pieces on the ground. “You’ll have to make a stronger
chain.”
Again Thor stayed up all night hammering away to make a new and a
stronger chain to bind the Wolf. All the gods wished him good luck and
prayed for his success, and in the morning they did think that the chain
he had made looked stronger. But was it?
Again, Tyr called the wolf over. “You astonished us yesterday, but if
you can break this chain, you will win eternal honour and your strength
will be known throughout the world and throughout the Heavens.”
“Where is the meat?” said Fenris.
“Oh we will give you the meat later,” came the furtive reply.
Fenris looked at the gods and saw the fear in their eyes. His evil heart
told him they would be even more afraid if he snapped this chain too,
and he knew that he could. He agreed to be bound. The gods made sure
the chain was fastened tight around him. “Get the meat,” said Tyr.
Fenris waited until the meat was near, and then he strained the chain. His
struggle lasted longer this time, and for a while it seemed that the chain
would hold, but soon enough, it too burst apart with a snap. The gods
stared at it in silence, while Fenris gobbled his meat and slinked away.
The gods looked at Odin. Something else must be done to curb this
monster among them!

“We will have to ask the dwarves to help us,” said Odin slowly, “to make a
chain so strong that Fenris will be unable to break it, and so light in
appearance that he will agree to be bound by it. I will send a messenger to
tell them of our desperate need. The dwarves have ever been our friends in
times of danger.”
A messenger was sent, and soon he was in the underground home of the
Dwarves. It was very dark, numerous lanterns lit the caves and the
stalactites and stalagmites. In fact, it looked quite pretty. Some Dwarves
ran about with yet more lights, some puffed bellows to heat the fires of
the great forge, while others worked a different shift and were resting on
toadstools chatting. The leaders of the Dwarves conferred together:
“We will make you an enchanted chain,” they said. They were a friendly
lot and set to work at once. It took a long time, for there is much work in
making a chain and even more in making enchantments. At last the
Dwarves proudly handed over their work: “It is magic,” they said. “What
is bound with this will remain bound until the End of Days.”
The gods’ messenger bowed low. “The gods will not forget their debt to
the Dwarves and will gladly thank you and help you if you are in need,”
and he flew back to Asgard.
When they saw it, the gods were not impressed. At first glance, it didn’t
seem like a chain at all, just soft and silken string. Then one by one, the
gods tried to break it. None could, not even Thor.
Odin smiled for the first time in a long while. “The time has come to ask
ask Fenris to try it,” he said, and he called him.
“We know how strong you are,” said Odin, to the wolf. “You have
shown us this twice. But now we have a further test for you.” He held
out the twisted strand to Fenris, “It is this.”
The wolf looked at the silken string and paused – he was not stupid.
“Why should I?” he asked. “If I succeed, no-one will think anything of
it, and if I fail, I remain bound.”
Odin smiled at him. “How could you fail, with your strength?”
“I fear a trick,” said Fenris. “If it is a trick, you will not help me. But you
shall not call me coward: you may bind me if one of you will place his
right hand in my mouth.”
The gods looked at each other, but they did not smile. There was a
silence. Thor moved as if to volunteer, but Odin stayed him. “No,” he
said. Thor and his hammer could not be risked. Then Tyr, always brave
and courageous, stepped forward. Fenris opened his huge jaws and Tyr
put his hand in the wolf’s horrible mouth.
The gods bound the whole length of the silken strand tightly around
Fenris, and tied the ends together with the best knots they knew. They
had a double worry: that the strand would not hold and that Tyr would
lose his hand. Fenris thought this himself, and began his struggle to
break free, but the harder he tried, the tighter he was bound.
Fenris jumped, stretched, and strained with all his strength but he could
not break the strand. Then filled with fury at the trickery of the gods, he
foamed at the mouth and bit off Tyr’s hand.
Even Tyr, brave as he was, let out a terrible cry. The goddesses led him
away to bind his handless arm.
“Prepare a rock, Thor,” said Odin. “Choose a rock deep-rooted in the
earth, and on an island. Bore a hole in it. Take Fenris to the island,
thread the strand through the hole, and knot it well. Our lives and the
lives of men depend on it.”
So it was that the wolf, Fenris, was bound and made fast to a rock, his
jaws spread far apart, foaming and growling until the End of Days.