Mato Anomalies

Your sanity meter is at the top left of the screen when running the random lairs, and it increases as your progress the story. It only goes up to a max of 150, and each battle in a lair will reduce that by 10. Therefore, if you get a random lair with 15 battles, you can get this achievement. Complete all 15 battles so your sanity meter completely depletes to unlock the achievement.

There are blue flags that can restore some of your sanity (similar to the green flag that will restore your health), so be sure to avoid those when going for this achievement. I never actually figured out what happens if your sanity reaches zero, but I grabbed a blue flag right after getting the achievement, so it may have a negative effect on battles you enter with zero sanity.