A look at one gigantic fact-based myth, as well as a larger examination of the functions of mythology. Those looking to create mythological creatures for your writing, I hope I can help you out!
These days, the kraken is synonymous with the giant squid. Since the 18th century, paintings of the kraken have shared a lot in common with architeuthis (giant squid). The tentacles, the eyes, the enormous size – it’s pretty much now assumed that “kraken” was just the old name for giant squid. This, however, is not the case. The following is the first recorded passage that pertains to the kraken:
“Now I will tell you that there are two sea-monsters. One is called the kraken (translated), another lyngbakr (not translated). The lyngbakr is the largest whale in the world, but the kraken is the hugest monster in the sea. It is the nature of this creature to swallow men and ships, and even whales and everything else within reach. It stays submerged for days, then rears its head and nostrils above surface and stays that way at least until the change of tide. Now, that sound we just sailed through was the space between its jaws, and its nostrils and lower jaw were those rocks that appeared in the sea, while the lyngbakr was the island we saw sinking down. However, Ogmund Tussock has sent these creatures to you by means of his magic to cause the death of you and all your men. He thought more men would have gone the same way as those that had already drowned, and he expected that the kraken would have swallowed us all. Today I sailed through its mouth because I knew that it had recently surfaced.”
Nothing in there jumps out as a giant squid. Indeed, some of the earliest descriptions of the kraken liken the creature more to a massive crab, giant whale, or some kind of undersea volcano. Yet, the cephalopod design stuck. Crab, whale, or volcano were no match for the power of illustrations like these:
That’s an image that inspires fiction, not to mention gossip. The actual existence of giant squid likely also helped this image dominate the kraken design. Whales were quickly a known creature and, outside of Japan, giant crabs do not exist. Undersea volcanoes would also be a rarer phenomenon than a giant squid appearance. Oh, and also Jules Verne happened.
While 1870’s 20,000 Leagues Under the Sea doesn’t call its giant cephalopods “krakens,” it further cemented the idea that there was a monster in the deeps and that monster was the giant squid (“architeuthis” was officially coined in 1857). My point in highlighting this is that stories – written, spoken, and drawn – created the modern kraken. Like the fiction, they came with an undercurrent of real-world truth.

When creating myth for a fantasy setting, it is important to remember two questions: where did it come from and why is it being told? The kraken came from a collection of real animals, but that wasn’t why the stories were so popular.
Back before the 20th century, seafaring was a much more dangerous business. A lack of technology made ships slower and smaller. A storm at sea, still dangerous today, was even more of a hazard. On top of that, our collective knowledge was even less complete. The ocean is still an unknown place today – in 1776, it was practically nonexistent. We knew nothing of the depths, save for the bizarre life forms that sometimes washed up or into fisherman’s nets.
Mythology serves a purpose in society. It provides a model for how the ideal life is to be lived. What is virtue, what is vice, what is safe, and what is not. The myth of the kraken underscored a very real truth: the ocean was a dangerous and unknown place. While no, giant squid attack on ships, was not likely – there were plenty of actual hazards to beware of.

So why do we do it? Why tell stories instead of being like “yo, be careful out there. A million things could go wrong before we include the massive storm option.”
As that oh-so brilliant quote illustrates, truth is boring. The truth is full of holes. Why did that ship vanish at sea? Well, there are a multitude of actual scenarios, some of which are genuinely horrifying, or we can say that the kraken did it. Even the kraken, for all its enormity and monstrosity, has nothing on a ship being stranded and a crew slowly starving to death – perhaps resorting to cannibalism in the process. It’s not just boring, the truth can also be far more terrible than fiction hopes to be.

So that real fear manifested with imagination to create a monster. The kraken is a myth that has survived and remains popular to this day. Despite not being “true,” it has deepened and enriched the history of our world, packaged as a product that is far more appealing than truth.
When designing mythology of your own, I recommend following this approach: imagine where the story came from, who’s telling it, and why are they telling it? What lesson does the story convey/what truth does it capture? Campfire stories never reach mythological status because there’s no greater takeaway beyond the fright.
Look at the real horrors of your imagined world and monsters will appear.
And now, the moment you’ve all been waiting for: