This is a really nice game and cool idea.
Unfortunately the balance kinda throws things out of whack for me. I spent most of my time trying to avoid the slimes so I could build up enough of an arsenal to progress just to get taken out in one hit by the phoenix in the sewer area.
I read that this is more of a proof-of-concept than a complete game, so I'm sure you have plans for expansions, but a few specific things I think could benefit the game is a higher water drop rate (since you need it for everything but as far as I can tell you can only get it from the first four graves), visible stats on items and enemies, the ability to use healing potions outside of combat, and more locations with cauldrons.
This is still very well made, and one of my favourite games from the jam so far. I'm willing to take another crack at it if there's something I missed, like some kind of strategy that makes things a bit easier/more balanced.