Lady of the Lake

The  is an entity wrought from Chaos, currently dwelling in Lake Salisbury.

Appearance
Her appearance is mostly unknown as she dwells within the lake, but her silouhette shows her as a slender woman with long hair.

Personality
Not much is known about her personality except that she is intelligent and usually calm as she explains in Merlin's place the reasons for the Boar Sin's actions as well as her goal, not showing any emotion even after being yelled at by Diane who thinks the Lady of the Lake doesn't know anything about Merlin who is their friend, to which she agrees. She doesn't personally know Merlin and simply states what she does know about her. She is capable of showing emotions such as fear and shock upon seeing Cath appear from the Boar Hat and becomes panicked as she tells Merlin not to let it get close to Arthur and quickly tells the Sins they must quickly retrieve Arthur's arm from Cath or they will see how powerful just a fragment of Chaos can be in the wrong hands.

History
At some point, Chaos created the Lady of the Lake within Lake Salisbury for unknown reasons. According to the legend, the Lady of the Lake bestowed the sword Excalibur upon the human king, Carfen, back when it was just a regular sword.

King of Chaos arc
When Merlin decides to carry out Arthur's awakening, she teleports to Lake Salisbury along the Sins and Elizabeth. Upon putting herself over the lake, Merlin removes Arthur's body still pierced by Excalibur from the Boar Hat. She says that all the preparations are set and asks the "princess" if she is ready, to which a voice from the lake asks if it is finally time to meet their master.

When Arthur is resurrected as the "King of Chaos", Meliodas asks Merlin why she would awaken a power that is both a blessing and a curse, and demands to know what her desire is out of suspicion. The voice from the lake asks to be allowed to explain instead of Merlin, about the desire made by a single lonely witch who wandered the land in search of chaos. Meliodas asks the voice to tell him who it is and to show itself. The being, revealing herself as the Lady of the Lake and the "Priestess of Chaos", apologizes for not being able to leave the lake. Meliodas is skeptical of her words as he explains that in the 3,000 years he has existed, he has never heard of a being called Chaos except from Merlin a few moments ago. The Lady of the Lake reveals that this is because Merlin hid that truth from everyone.

Meliodas asks her what she is talking about, which leads the Lady of the Lake to narrate Merlin's past and her past, one-sided love for Meliodas who was never reciprocal. The Lady of the Lake finally explains that Merlin dedicated her life to resuscitating a being known as Chaos, the one who created the world, the gods, and the five races, and for that she used the Seven Deadly Sins to destroy the Demon King in order to disrupt the balance between light and darkness that he and the Supreme Deity upheld. Diane reacts very angrily, stating that Merlin is their comrade and that she doesn't know what she's talking about.

The Lady of the Lake admits that Diane is correct as she herself doesn't know Merlin personally nor ever spoken to her before now. However, she reveals that is aware of a series of facts, such as that Merlin was the one who asked the giant Dabuzu to create the Coffin of Eternal Darkness to seal the Demon King and the Supreme Deity. And recently, it was also Merlin who deliberately delayed her Chrono Coffin for the Demon King to possess Meliodas, that she was the one who reactivated Elizabeth's curse after Meliodas destroyed it and finally made Meliodas launch their combined attack into the lake; all in order to achieve her goal to bring Chaos back.

Meliodas exclaims furiously that if she reactivated the curse for that reason, to which Merlin replies that she also saved Elizabeth. Meliodas then asks if forming the Seven Deadly Sins was also only in search of her goal, to which Merlin does not respond. The Lady of the Lake mentions that hating someone until she wants to kill him but at the same time being able to love him is what human beings do, so she wonders if since they and Merlin are of different races, they will ever really be able to understand each other.

When Meliodas reproaches Merlin for using the Seven Deadly Sins to revive a being that may never exist, the Lady of the Lake states that Chaos exists and that they have already been face to face with it for a long time. When no one seems to understand, the Lady of the Lake reveals that they have been traveling on it and that all that time has been waiting for her resurrection; leaving everyone shocked to see that she refers to Hawk Mama. The Lady of the Lake says that Chaos itself is a will of power, so it does not manifest itself in physical form and that Hawk Mama was a provisional form that the two gods sealed it away in. There, Hawk Mama is revealed to be a moss shell whose content, Chaos, is now inside Arthur who has become the heir of its power.

When Cath shows itself happy to see Arthur, the Lady of the Lake is alarmed by its presence and tells Merlin not to let it approach Arthur. Cath then attempts to devour Arthur, but only manages to tear off his right arm due to Meliodas' intervetion and when it transforms into a monstrous form, the Lady of the Lake tells them that they must retrieve Arthur's arm quickly or they will soon know how powerful even a fragment of Chaos is.

The Lady of the Lake says that she did not recognize the creature immediately because its appearance and magical power differs greatly from the past. Merlin asked her if she knows his true identity, to which the Lady of the Lake exposes Cath as the tyrannical monster that challenged Chaos long ago, Cath Palug.

When Cath Palug absorbs Arthur, Elizabeth and the Sins within another dimension created with the fragment of Chaos that he absorbed, the Lady of he Lake stays outside and watches as Arthur releases everyone using a reincarnated Excalibur.

Abilities/Equipment
Her abilities are currently unknown, except that she is very knowledgeable.

Merlin
The Lady of the Lake has stated that she has never talked to Merlin herself nor personally knows her, and simply tells of what she does know about the sorceress, displaying a very neutral tone and when talking to Merlin about reviving Arthur as the "King of Chaos" shows a more business-like demeanor, showing their relationship is mutually for their shared desire of turning Arthur into the new host of Chaos and nothing more.

Cath Palug
While the monstrous cat doesn't take any notice nor caring toward's the Lady of the Lake's presence, the entity herself is very fearful and anxious of the beast's appearance from the Boar Hat, panickedly telling Merlin to not let Arthur get near him and saying that they have to kill the monster after it consume Arthur's right arm.

Trivia

 * The Lady of the Lake is directly based off on the character of the same name from the Arthurian Legends.