It might have been used as a spacer. If you need an inexpensive spacer, a nickel and a file will make quick work of it. The otherwise high grade and dark surfaces support this hypothesis. I wouldn't be surprised if there's a small mark on the edge where it was hammered into position.
The easy answer is: Post Mint and Environmental Damage. Like @green18 said, it appears someone was attempting a project and stopped before they finished it.
Did you let it out of the house? There are some bad people out there these days and this is just terrible to see. You should really protect your coins, these days. It's not like the old days when you could let them out without worry. This should be a lesson for all of us, safeguard your coins, there are evil people out there who want only one thing, to hurt them.
I BP said it was damaged and it is but it looks like someone tried to make it look like a reverse proof and failed miserably.
Don't you hate it when you wake up and your in a "fog"....And no matter how much coffee you drink your still in that fog?!....OOh Man.. I hate that.