Very interesting topic, @Nightroia! There are so many tragic stories aligned with the DC villains and I like seeing the different responses to this question.
I think that Clayface is a great candidate for most tragic DC villain.
In Batman: The Animated Series, Matt Hagan had an accident that left him disfigured. He reluctantly agreed to undergo an experiment that would improve his situation, with some serious “side effects”. As he tries the various personas with his new abilities, he loses control of his “powers” and can no longer impersonate himself anymore, effectively becoming a Gotham villain.
The Batman depicts Clayface stemming from a dangerous interaction between The Joker and Bruce Wayne’s friend, Detective Ethan Bennett. Each time Bennet undergoes the metamorphosis, it cannibalizes his DNA, forcibly denying Bennett from ever having the ability to revert back to any semblance of his former self. Through his journey, vengeance takes over and he also battles Batman as a Gotham villain.
Here is the DCU Encyclopedia “quick description” entry for Clayface: The tragic Clayface is a virtually indestructible shape-shifting monster who’s both threatened Gotham City and served as an ally to Batman.
Interestingly, the Ethan Bennett Clayface is not mentioned as one of the eight unique people to hold the mantle.