Grey, Lyon, and Ur are the three ice wizards known in the first portion ofFairy Tail. Besides the fact that the two boys were students of Ur as children, the three mages are tied together by theirknowledge of incredibly dangerous magic. Each of these mages knows the Iced Shell spell. A form of their Ice Make magic that allows them to permanently seal off powerful enemies, with dire consequences. Each of the three began the spell but only one of them was able to complete it. With the cost of Iced Shell being as high as it is why are the casters willing to take the risk?
Fairy Tailfollows Lucy, Natsu, Erza, and Gray as they complete missions for the Fairy Tail guild. The overarching plot is that Natsu is looking for his foster father, a dragon named Igneel. However, in a multi-episode arc, the viewers were treated to an in-depth look at Gray’s history and what made him the mage that he is today.

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What is Iced Shell?
Iced Shell is a powerful spell that can be cast by Ice mages. It turns the caster’s body and spirit into athick coating of icethat fully encases and seals the target. The size of the shell appears to be whatever it takes to encase the target. There are many reasons to believe that the mage is still alive but simply exists as the ice itself. Firstly this is what Ur tells Gray will happen before she casts the spell herself. But this is a teacher and mother figure talking to a child, so she could be sugarcoating the truth to make things easier for him.
The far more compelling reason to believe that the mage lives on is the fact that thelost magical art of time controlis unable to reverse time. This magic is explained to only work on inanimate objects, it has absolutely no impact on the living. This does imply that Ur might still be alive in the form of ice, however, it isn’t explained whether or not that magic can be used on things that were previously alive, i.e. corpses.

There is another form of iced shell, Lost Iced Shell. This one is said to be even worse forthe mage who casts it,as it will erase the memory of their existence from everyone who ever knew them. Although, with this higher cost is presumably more power and efficacy in the spell itself.
The Implications
Ur casts the spell to lift the darkness from Gray, but more directly to seal off the demon Deliora. She urges Gray to tell Lyon that she is dead so that he doesn’t waste his lifetrying to reverse the spell. Ironically he spends his entire life trying to reverse the spell anyway, but for different reasons. Instead of wanting to save Ur so that he can surpass her, he wants to undo her final act so that he can beat Deliora and surpass her.
It is unclear to what extent she is alive. But once the spell is lifted someone comments that as a liquid Ur can watch over her students more effectively. This implies that perhaps Ur is aware of the events going on around her. Unfortunately, this also means that she knows that her sacrifice still resulted in Lyon giving up the rest of his lifeto pursue her legacy. Further, her lie to spare him only meant that instead of trying to reverse the spell to save her he was actively killing her in an effort to surpass her. And worst of all, she had to impotently watch him do it.
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This also meant that she had to watch as Gray was willing to cast the exact same spell that she did, but to imprison Lyon so that he couldn’t reverse her spell.She sacrificed herself to allowboth of her students to go on living full lives. Not only did Lyon fail to do so, but she also had to watch as Gray very nearly threw his own life away to stop Lyon.
Iced Shell is an incredibly powerful spell that only a small subset of mages can use. However, the cost of this spell is far worse than the magical drain that most spells cause. The user gives up their corporeal body, and an unknown amount of their spirit to create the ice that encases their target. They continue to exist in this state indefinitely or until someone kills them using the MoonDrip spell. Their target is for a timealive within this shelltrapped in eternity with them, but eventually, their life force is drained away, and the original mage remains in ice form encasing only a corpse. They are perhaps still aware of the passage of time, and of those around them, if not then are they really alive at all?