Originally "Blinding the dolphin" was an old ancient pirate sport, as they drank a lot of rum and were horny, but didn't want to have pirate bum sex if there weren't any wenches to plough like a cornfield.
They decided it would be best to just give themselves the old low five, but in good ol' fashioned pirate tradition, were drunk and had fun with it, and had a competition to see who could unload a love shot into a jumping dolphin's mouth.
However, due to the Charlie Sheen like state one pirate was in, he ended up jizz blinding a dolphin, and thus the sport evolved into this turbo event.
Nowadays, seeing as it's illegal to jizz in a dolphin's eye as PETA will cry stinky tears, soak their arms in Kerosene and fist fuck themselves in the ass, the term is now used to express the activity of wanking into the sea to prevent a cum-based sealant in the toilet at sea.
Guy 2: "You're better off blinding the dolphin, or you'll clog the shitter with man mayo."
Guy 1: "What's that?"
Guy 2: "Like this..." *Blinds the dolphin*
Guy 1: "I think I'll join you, looks fun!"
*Both blind the dolphin*