Severe heat exposure is my best guess... I guess it would definitely be severe heat exposure if it went through the dryer lol
I think all three above me are good guesses. I would go with acid, since it best explains, to me, overall look of coins. The pitting would be caused by different concentrations of different metals in the flan reacting differently, (nickel usually doesn't react with acid as much as copper).
Think of a dryer like a big tumbler with heat. The edges would be knocked in if this were dryer damage. A strong acid did this, the edges kept their shape.
"sandblasted" in my opinion, but the coarse paint and rust stripping kind, not the fine polishing and ready to paint one.
Do not disagree, which is why I said usually. All of the different acids and bases can behave differently but was simply talking about on average the relative reactiveness of the two metals. You see this a lot with things like gold treasure coins, any non-gold particles on the surface will react to the seawater, leaving holes in the surface.
No. I don't think it's a dryer coin. Dryer coins usually have a lot more material missing with damage that is quite different than what your coin shows. Here's what dryer coin damage usually looks like:
The quarter could have also been sand blasted. When I was a kid, I got ahold of a sand blaster and needless to say, one of the things we tried it on first was a coin. Turned out pretty much like what the OP posted.
