Assuming running the exhaust into water will make a lot of difference, which I doubt - 12 hours running is likely to evaporate a few gallons of water so the level will need to be automatically maintained. May need to augment storage capacity to cope.
I live very close to marinas with lots of boats and I can assure you, water does very little to quiet engines down unless it gets sucked into the intake.
Being out on the water makes sound carry very well. Two boats moored a few hundred yards apart can converse between them quite normally if the water is calm and ambient noise is scarce. It acts like an amplifier. It's why Jesus gave sermons from a boat to crowds on the shore. That trait of water has nothing to with its ability to quiet exhaust forced through it. It's a dense, cheap, readily available liquid that works well as a muffler. My two-stroke 9.9hp evinrude run with water hose earmuffs (exhaust open to the air) is over 3x louder than the same engine run in a barrel of water.
So a boat that's using say 250hp can be very quiet to those near it but if the exhaust breaks the wake it's gonna be loud on the shore. Likewise, the high-winding seadoos zipping around on 50hp can be obnoxiously noisy as their exhaust is constantly breaking the wake as their hulls noisly bounce across the surface. If water wasn't a very very effective muffler, every lake would sound like a nascar race. Bear in mind, boats use no muffler other than the water so if it didn't work, it wouldn't be debatable.
LOTS of engineering goes into NVH or Noise, Vibration and Harshness, in the automotive world. For these reasons, you barely hear a modern car at idle or when coasting down the road.
When you stand on the right pedal, some sound comes from the intake, some from the exhaust and some from mechanical actions, i.e. pistons, valvetrain, etc. New diesel engines (pickup trucks) have received HUGE improvements in mechanical noise reduction over the last 5-7 years, so much so, that they now sound like gasoline cars at idle.
A cheap or off name brand generator will see NONE of this NVH engineering. So, while you may be able to add a better exhaust or install some generator box liner from a company like Cascade Audio, you will not be able to do anything about the noise that the engine makes.
There is a reason that Honda generators are the quietest and most reliable on the market: Honda dumps millions and millions of dollars into making them that way.
Honda EU2200 costs about $1000
Cong Shen 2000W generator costs $400.
Why do you think that is??
If a 3500W genset is not enough, I would suggest two 2000W Honda or Yamaha generators, thereby offering flexibility, redundancy, and most importantly quiet.
As you probably know, used Honda generators hold their value very well, but can be picked up for $600 - $800 with some shopping. To quote an old commercial, "Buy it once, buy it for life."
You will be time and money ahead making a long term investment, instead of trying to make a cheap, loud generator, quiet.
If you insist, a large volume muffler will absorb the most sound, probably not something that you want on your generator and an in-your-face example of why most small engines, i.e. weed trimmers, chainsaws, etc., are so damn loud.
For example Aston Martin who is known for beautiful and at least reasonable high end performance luxury cars, produced the Aston Martin Lagonda, which is consistently rated one of the worst cars ever built, in the same category as the Ford Pinto, Trabant, and AMC Pacer.