(This display is not putting her especially at ease.)
The yin iron is a dangerous metal, fed resentful energies through human sacrifice. All who have attempted to use it succumb to madness, the very nature of the metal impossible to purify. Its existence in a place draws monsters and other forms of evil. Hence why her piece has been sealed away in the Cold Pond Cave - a place of positive energy.
Lan Yi herself had once been foolish enough to mess with it, though her friend Baoshan Sanren had warned her against it. She had undone the seal which kept it hidden. When she discovered that it was too unwieldy and uncontrollable to suppress, she attempted to seal it away again. In this task, Lan Yi sacrificed everything and became bound here.