Alright, as it stands, breeding is a bit of chaos. There are some creatures with half a dozen pet houses, and some with only one. The breeding time is *just* long enough to where a player doesn't have time to do anything between eggs being generated. Base HP/ATK stat boosts are random as heck. Even rarities and tiers are extremely RNG based.

I propose a series of changes to the system. I'll break it into parts in the event that one part is considered a good idea while another is not. I will start with the longest and most complex part first.

Firstly, the base stats. The current system for decided the base stats of offspring is a random number between 0 and the highest stat of either parent. For example, with a 42/50 creature and a 45/37 creature, the offspring could have anywhere between 0/0 and 45/50. Odds are, however, extremely slim that the offspring would inherit 45/50 stat boost. The offspring will almost always end up with something lower than that. This means that through repeated breeding, stats will end up lower than that of the original caught creatures. I propose that the system be changed to averaging the values of the two parents' stats together, minus a random number between 0 and X, where X is 5 plus a value known as the incest stat. The incest stat will be calculated in the following ways: Breeding an creature with its parent will add an incest value of 4 to the offspring. Breeding a creature with its grandparent would add an incest value of 3 and a great grandparent would add 2. Breeding siblings will add an incest value of 5. Breeding a creature with an aunt or uncle would add 3. Breeding with a great aunt/uncle would add 2. Breeding a creature with a "half" something (half sibling, half aunt, etc) would add a 0.5 multiplier to the number being added (2.5 for sibling, 1.5 for aunt, etc). Incest modifiers would count from up to three generations back, with a .5 multiplier for each generation back (1 for parents, 1/2 for grandparents, 1/4 for great grandparents, 1/8 for great great grandparents). Any breeding with a relative from farther than three generations back would be considered unrelated so as to aid with keeping track of a family tree and help with keeping data consumption down. I *think* this would result in the maximum possible incest stat being 20, which would mean a maximum point loss of 25. The incest stat would NOT be visible. The player would have to keep track of the family tree by his or herself. Numbers would round up so long as they are greater than 0.5 (35.6 -->37, 23.85 -->24, 42.25 --> 42).

Secondly, the rarities and tiers. I will refer to common/uncommon/rare/divine/legendary as rarities and white/green/blue/purple/yellow/orange/red as tiers. When breeding two creatures of the same tier, there should be 25% chance to stay the same rarity, 50% chance to downgrade once, and 25% chance to downgrade twice. It would not be possible to downgrade more than twice. For example, breeding two legendaries would always end up with either a legendary (25%), a divine (50%), or a rare (25%). Breeding two creatures of the same tier would have a 25% chance to stay the same tier, 25% chance to go down one tier, 25% chance to go down two tiers, and a 25% chance to go down 3 tiers. For example, breeding two creatures with red (level 7) tiers would always result in a level 7 (25%), a level 6 (25%), a level 5 (25%), or a level 4 (25%). If a creature can't lose as many tiers or rarities as are rolled, there is no penalty. For example, breeding two tier 1 creatures and having a resulting offspring with -2 tiers would have no effect. It would just be another tier 1 creature.

Third, pet houses: Pet houses are rather odd at the moment for a variety of reasons. Some houses have tons of pets that can breed in them, others have barely any. Some pets can breed in most houses, others can breed in barely any. I suggest regulating each pet house to have ~4 types of creatures that can breed in them each. There should also be 2 or 3 (no more, no less) other pet houses that the creatures could breed in with less efficiency. If a pet is in the preferred house to breed, the breeding hearts will be red, rather than pink. I will list the creatures and what their preferred pet houses would be in the new system below. Most are the same, but some are different. Some pet houses will also have changed names. Remember that this is what the preferred breeding spot will be, but other places will be able to breed creatures at lower efficiency as well.

Standard - chicken, wisp, cow, repty
Graveyard - Night Crawler, Skeleton, Spirit
Desert - Scorpion, Desert Repty, Sand Worm
Slime - Slime, Cavern Slime, Desert Slime, Snow Slime
Ice - Snow Repty, other creatures will have to be added
Forest - Chenille, leaf lion, boar
Poison (renamed to "jungle) - Raptor, Naga, Guardian*
Rock (renamed to "mountain") - Ice Eagle, Yeti, Rock Worm
Cavern - Bat, Toxic Bat, Crawler
Hell - Lava Golem, Tormented Soul, Devourer
Horror (renamed to "flesh") - Mimic, Creep**, Hell Dog, Butcher
Shadow - Claw Disciple, Fist Disciple, Spear Disciple, Sword Disciple
Alien*** - Brutor, Howler, Soulsucker, Scavenger, Tripod, Mother Brain
Futuristic (new) - Brutal, Psionist, Regular Alien, Drone (if ever capturable)

* - Guardians would be changed to only spawn in the jungle area.
** - Creep could really fit in either cavern or flesh, but I decided to go with flesh based on the creep's looks, rather than cavern with where the spawn location is.
*** - Yes, I'm aware that there are more than 4 creatures in the alien house. But I couldn't really come up with a better place to put them.

Fourth, the time it takes to breed and the way breeding is done. Right now, it takes roughly 10 minutes per every 2 eggs. I suggest the speed for breeding and egg hatching is doubled. This is because right now, the speed is *just* long enough to where the player doesn't have enough time to do anything important, but too long to just wait around. The preferred pet house will function at 100% efficiency, any lesser pet houses will function at 50% efficiency, and the standard pet house will function at 25% efficiency (with the exception of the chicken, wisp, cow, and repty, which have the standard as the preferred pet house). I also suggest egg pipes, which would transfer eggs from pet houses to incubators, and soul gems from incubators, to chests. Temperature Regulated Incubators (name subject to change) would also be added. These would function at 33% higher efficiency than regular incubators, as well as having the option to hatch instantly at the cost of souls. Decorations to boost a pet house' love meter should have an exponential decay of 0.5 for each item of the same type being added (for example, if item A gives 128 points, placing 4 of item A would give 128 + 64 + 32 + 16).

Lastly, dark souls. While these don't have very much use right now, they will have more use in the future from what I've heard. If this is the case, the system above will lead to a greatly increased amount of dark souls, thus being rather overpowered. As such, any creatures created from breeding, when sacrificed, will give the square root of the amount of souls they would normally give, times 3. If a creature would give 400 dark souls during sacrifice normally, breeding that same creature would and sacrificing it would give 60 dark souls. The square root is to prevent the overly large difference between rarities while still allowing the player to make gradual profit from breeding.

Let me know if I made any mistakes (like forgetting a creature in the housing section, an error in math, etc), as well as if you have any questions or suggestions on how to improve this system. I *think* this system would be a fairly balanced way to obtain the "perfect" 50/50 legendary pet with all level 7 traits, but it's hard to tell without practical testing. It could very well end up being too easy or too hard.