It is less pillowshaded, but zuloon it very much appears as if you took your basic existing shading and just moved it up a couple of pixels. Unfortunately, this is still pillowshading! The point everybody has been trying to make is that pillowshading is fairly silly and artificial because it is not really based on light or a lightsource or the 3d form that you are rendering. An exercise that I find really helpful (And that lots of traditional painters do with charcoal) is to try and render your shape using just a few shades of gray, maybe 3 - light, midtone, and shadow. This is frequently helpful for a lot of reasons, not the least of which are not having to worry overmuch about color, and not having to worry too much about those high-end pixel art techniques like AA and dithering, etc. This piece also relies much too heavily on outlines and mirroring, and the pose is very dull.
So, to recap, try sketching this character in a more interesting pose, without mirroring, without outlines, with just a few shades of gray. Even if you don't like how it turns out I think you might find that it is an illuminating experience in and of itself! You need to get your brain thinking about forms and volumes and light, not pixels just yet.
Good luck!