It is a small Krabby Patty.
In "Pineapple Invasion," it is shown to have been bronzed into a trophy.
When SpongeBob was a baby, he made a perfect Krabby Patty.
Shortly after, he had it bronzed.
Before it broke, SpongeBob was planning to give it to his grandchildren.
Role in series
"Friend or Foe"
It is seen bronzed, but it is broken when Gary is trying to stop Plankton from getting the formula. SpongeBob was planning to give it to his grandchildren.