Velanir is a former servant of Damian and Black Ring member whose ghost reluctantly resides at Keara's Flying Fortress in the Orobas Fjords. The husband of Keara, some of his fondest memories of being alive include: offering his wife the severed head of a lad who accosted her, choking on a wedding ring after hunting for human flesh and eating an entire family together with his beloved, and beheading slaves for sport.
"Monkey" (the nickname given by his wife, which he hates) was killed during a game of Truth or Dare when a demon slit his throat on a dare. His skeleton was subsequently reanimated by his wife, who continues to have a relationship with it (see Forgotten Piece of Paper). Unfortunately, the fortress' defenses prevents him from entering Keara's chambers and fusing with his skeleton, which he must do in order to escape to the Hall of Echoes.
If you choose to help him ("Why don't you stick close to me and we'll get you your body back!") Velanir gives you the quest Close to the Bone.
If you refuse to help him ("If you're expecting my help, think again. You're Black Ring after all!") he attempts to kill you so he can escape using your body. He drops a few random items if killed.
Mindreading him reveals: "If I ever get out of here I mustn't forget to bring my axe. But then I'll have to break through that bloody ice wall first somehow." This allows you to loot Velanir's Axe from a chest in the headquarters (otherwise it is replaced by a random item).