This is a drop from the GC30 "Operation Desert Swarm". This is the one that has 6 scorpions that, at least on Unicorn, BLMs have capitalized on and run a buisiness on.
I'm sure it does stack with things such as Jelly Rings.
Just like most things in this game, just equiping one thing with a certain attribute isn't going to have an earth-shattering effect. But when you get a lot of gear that all does one thing, then you'll start to notice a large difference.
too bad this shield type is the worst possible shield you can get. it never blocks. it you want a gaurenteed damage reduction use an earth staff not this piece of garbage.
It's true about the low block rate, but that has zero to do with the -2% reduction. You're reducing 2% physical and magical whether the shield activates or not.
That said, this shield has very iffy uses, and another shield will likely reduce more damage over time by blocking more often. It's an item you don't use by itself; 2% by itself is not noticible. So you stack it with items like the Jelly Ring and/or Defending Ring and even Darksteel harness set, for example. Unfortunately sometimes it's just not worth the low shield proc, and macroing it in sacrifices TP. The best use I've found for this is against magical spamming monsters with weak physical attacks. Although you're hard pressed to find such monsters sometimes.
The Earth Staff is generally superior at reduction, but it is also a pitifully weak weapon. Use the Earth Staff when you won't have trouble holding hate (say through a THF or /THF), or when your damage is a negligible moot point (HNMs etc), but if you need your Sword's damage, you have this option available to you.