It's very cute <3 I look forward to seeing its walk cycle animated, I hope you'll do that. The little stubby legs!

The head resembles a goat head more than a sheep head to me. Sheep tend to have a less prominent and smaller mouth area that's more rounded, and appears to taper more relative to the rest of the head. Yours has a square jaw that's relatively large relative to the rest of the head, which is more goat-like.

The dark lava bits on the torso look pillow-shaded, which is especially odd here since I would assume the red/hot lava bits should be glowing, so if anything, the bits at the edges of the dark sections should have more light on them than the inner areas of the dark sections.

Before you worry about that though, and before you spend too long animating it, try to shade the sprite so that its form is visible. You've shaded everything separately as if it's a distinct object, so the sprite feels very flat. I am not sure how to explain it, so here's an example from this lovely tutorial:

This is what you have (texture only)
This is what you're missing (a sense of the forms making up the creature)
This is what it looks like when you have both forms and texture