its better, but you missed a few really crucial things I did: shading on the head to give it depth (very important, head looks flat), and cleaning up his chest and giving it visual clarity (it doesn't read well right now, hard to tell if it's a glowy thing or a design)
as for your beast :
- line work on the top of the head still had right angles, look wierd / unintentional; i also rounded out the back of the head to give it a more organic feel
- the shading had a lot of banding (pixels "lining up" to create blocks, which makes the sprite look not organic) so I added depth to the shading on the head to fix it and tweaked the pixel placement on the legs to fix those
- desaturated the brightest blue (it was at full saturation, which was too bright for the rest of the piece, imo)
- brightened the legs to bring them in line with the rest of the piece--they seemed like a separate element since they were completely darker, and shared very little color with the head. i dont know if that was your intention but in my eyes at least it make it seem strange, especially since the bright highlights made it look slimy like a squid, not a spirit
- fixed the line work on the tentacles following the brightening up, a lot of the lines were sharp (diagonal single pixels or straight lines). try using "transitional lines" insted of sharper ones (so, instead of a border that goes "5-1-1" have one that goes "5-3-2-1", it'll look smoother)
- maded the rightmost tentacle less thick to match the other two
- i wanted to change the middle tentacle, but im not sure what your intention was -- where is it attached? to his body, and pointing up? (that's how i interpreted it, at least, and changed it accordingly) or to his head, and rounded at the bottom? it's hard to read because the shading doesn't tell us
all of this in mind, here's my edit:
yours on the left, wierd tentacle in the middle, my idea of the tentacle on the left
feel free to use in your game to whatever degree you want to. hopefully, my thought process will give you a bit of insight to take your art up a notch. good luck