Cracked burnt valve in my motorcycle engine (It's a 1988 Kawasaki KLR 650).
That explains why it would not run too well lately, and i had a really hard time starting the engine. There was virtually no compression at all (which is no surprise when you see that hole).
What's amazing is that the engine could still run at all with that enormous hole in one of the exhaust valves, as long as i kept it above 3,000 RPM. I was able to drive the bike 700 miles at 70 Mph to bring it home in San Francisco, from Death Valley.
I think it started as a hairline crack (like the one that can be seen on the left side of the damaged valve), and then slowly got larger with the years and the hot gases flowing in the crack. Also, because of the crack, the valve was not seating well, so it got hotter (normally valve heat dissipate in the head when the valve is closed). This crack (combined with a tight valve adjustment) contributed to weaken the steel of this exhaust valve even more, causing what's called a "burnt valve'.
I checked the other valves and they are in decent shape. There is a minor leak in one of the intake valves (I might need to get this one reseated). The good part is that the damaged valve is not bent, and the valve seat is clean. So i'll just replace that valve and lap it.
The piston is clean, and luckily no shrapnel debris from that valve got in the combustion chamber.