Background: Recently I published this guide to the graphics of the Mega Drive. I included a page about mid-frame palette swapping, of which perhaps the most famous example is the Sonic 1 water effect: The effect is also seen in Gaiares, which came out six months before Sonic 1: You can see videos of these in action on the 2nd link I posted above. I speculated that the water effect in Gaiares might have served as inspiration for the Sonic version. The way they both hide the CRAM dots with flashing wave sprites is very similar. Oh, and the Japanese version of Sonic 1 features a line scroll ripple effect under the water, similar to Gaiares (this ripple effect was not included in the earlier international releases). So, today, Japanese Twitter user @Va_HARA informed me that he had done an interview recently with Yasushi Yamaguchi (aka Judy Totoya) and Naoto Ohshima, published in a Phantasy Star dojinshi, and the topic of the water effect came up. I happened to have this dojinshi but had not yet read the interview. Here is a translation of what is said (brackets indicate my comments): As I speculated, the effect seems to have been inspired by Gaiares. It's interesting to think what it would have looked like to do the water entirely with checkerboard dithering. Some games did use such dithering for water, such as the waterfall in this scene from Castlevania: Bloodlines (just the waterfall--the water on the lower part of the screen is done with palette swapping like Gaiares): One thing's for certain: If the water was done with dithering, it would be a lot harder to play on an LCD nowadays!