Lore

The Asylum Demon was created by the Bed of Chaos and ensures that only the most powerful Undead are able to escape the Northern Undead Asylum. It is first encountered when approaching the graveyard at the Undead Asylum whereupon it jumps down from the roof of the building to attack the player.

The Asylum Demon was likely put in place by Gwyn and his descendants to test any Undead who would hope to escape the Asylum. Gwyn and his descendants do not want just any Undead to escape, they want a powerful Undead who would be able to replace Gwyn as fuel for the fire.