When you shade or highlight just around the edge, it flattens the image (as well as creates banding). Instead of shading it according to its volumes, you’re shading it according to its shape, and the result is it looks completely flat. The dithering is also unnecessary, it doesn’t really add anything to the piece. All of this can be fixed by picking a light source, keeping in mind the actual 3d volumes that make up the anatomy of this creature, and shading according to how the light hits those forms. Your palette could also use a wider range of values to make the image ‘pop’ more, especially the metal helmet, which the dull highlight ruins. Also the outline on the cup is too light.
Nice dithering.