Cursed Eye of Paleth

Eyes of Paleth are objects created by human priests to shine bright. The Cursed Eye of Paleth is a cursed one that was witness to a terrible tragedy and became corrupted. Because of the Cursed Eye of Paleth, the sailors of the Lost Fleet of Kul Tiras on the coast of the Wetlands were risen as undead. They covet the orb, damned to their fate by Captain Halyndor. It was gathered by an adventurer and cleansed by Archbishop Benedictus.

However, years later, after the Cataclysm, the fleet was still cursed. What seemed to be the Cursed Eye of Paleth was found again even though it was cleansed years ago. Glorin Steelbrow did not know what this second one was.

The undead of the Lost Fleet can transmit you the Curse of the Eye when hitting you.

Source
The Cursed Eye of Paleth is provided as an objective for the following quests:
 * The Eye of Paleth


 * Cleansing the Eye

Speculation
The Cursed Eye of Paleth may also be the reason Daenistrasz is undead, as he is found undead among the remains of part of the Third Fleet at the bottom of the Great Sea. It is also possible that Derek's body survived on the bottom of the Great Sea until the Fourth War.