Project LOTUS is a biological weapon created by SANCTUS. When it was injected into targets, it would cause them an excruciatingly painful death, along with severe bruising and bleeding. After SANCTUS went underground, they would continue experimentation on the weapon and house it in a black site lab, located underneath the Bodhi Spa.
Years before the events of the series, an Agency division known as SANCTUS, had attempted to create a restorative agent for the human body, and captured countless civilians to test it on. However, it only caused them an excruciatingly painful death with severe bruising and bleeding. The only survivor to the virus was a criminal known as "Riddler", who was doused with the chemical in an accident. It enhanced his physical condition, yet it caused severe damage to his brain chemistry and broke down with Obsessive Compulsion Disorder (OCD) and Narcissism. After the Riddler founded the Pact, he informed his recruits of its abilities, and they started to plan on how to obtain vials of LOTUS from the facility. Each member wanted to cure themselves of their weaknesses.
During the raid on the SANCTUS facility, the Pact unlocked the chamber holding a giant capsule of LOTUS vials. During the ensuing scuffle between Bruce Wayne/Batman, the majority of the samples were incinerated or damaged. As Victor attempted to salvage three vials, Harley Quinn managed to subdue Fries to steal the vial for herself, infecting him with the virus in the process.
A standoff between Harley, the GCPD, and the Agency later commenced on the Gotham Bridge. After failed attempts to persuade her to surrender, she was either assisted or subdued by John Doe, who proceeded to blow up portions of the bridge and dive into the waters beneath.
Three weeks later, John, now calling himself "Joker' possessed the virus in two different capacities:
As a vigilante, he continued to hide it from Waller, secretly hoping to use it against her soon. But with Bruce's firm persuasion, he reluctantly handed it over, whereupon the Batmobile's destabilization slot disabled it within seconds...ending the legacy of SANCTUS within Gotham forever.
As a villain, Joker & Harley relocated to the Ace Chemicals Plant and used its equipment to mass-replicate the virus into detonated weapons, which were promptly hidden throughout Gotham. They proceeded to cruelly poison most, if not all of Wayne Enterprises' active staff, a Gotham Harbor barge, civilians on the Gotham Bridge, and even multiple patients at Mercy Street Hospital. Another had been stored within Divinity Church, though Batman was able to diffuse it before detonation. Joker had one final bomb stored apart from these...which he saved for his lethal dinner party. However, an outburst from Harley towards John's exposed reluctance in helping her allowed Bruce to use a knife to disable the bomb. Waller gathered the remainder of the bombs and left Gotham with the virus in her possession.
Project LOTUS's effects could vary, depending on the person used on and the strength of the dosage. In most instances, the victim would bleed furiously before succumbing to the virus and dying. However, there was only one known survivor, the Riddler. According to Victor Fries, LOTUS was capable of healing most medical and psychological problems, depending on whether the victim survived. It seems these included addictions to substances and seemingly incurable diseases. However, as Alfred Pennyworth pointed out, it would, in return, cause severe damage to the chemicals in the brain, resulting in permanent damage and driving the person insane.