Emerging from the debugging waterfalls of Emerald Hill zone.... is Ashura! Ashura's an old glitched version of Sonic in the Genesis version of Sonic 2 when rapidly spamming waterfalls into place with debug mode in EHZ. After a certain point, Sonic's palette hiccups and results in this.
He was made with the Sonic 3 style in mind, though I put S1/CD Sonic there for height reference.
