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I think you should listen to your gut on this and make each level up somewhat rewarding. Generally people like high numbers and feel they are a reward in themselves, when in reality they often serve as padding and lazy game design. Still, if you are going to condense the standard experience I think you really need to condense the rewards too. Give players a healthy payoff with every milestone hit, even if only every third one is related to a combat boost. Like for example, maybe each character has a unique overworld or dialogue-related ability that opens new avenues outside of combat. Eg, “John feels stronger!” on every other level up, allowing John to move increasingly heavier objects in the overworld which open previously unavailable shortcuts or areas. That way you can balance your combat the way you’ve planned it but also give the player something new with each star.

Rewards that affect overworld abilities is a great idea for a workaround! I’m yet to fully decide on how shortcut unlocks work so I’ll definitely keep level up rewards in mind going forward!

I haven’t written about it yet, but there are resources you can collect throughout the overworld to upgrade your base, and maybe a random one of these with every level would satisfy the need for immediate reward.

And now I’m thinking about it more, maybe there could be a reward wheel that you can spin each level-up with varying rewards in 20 slots that slowly get reduced as you level so you’ll always get all rewards by max level- then I can add things like ATK+1 so you sometimes get that immediate amazing reward but I can still keep numbers low!
I’m coming up with this as I’m writing so it’s a bit all over the place, but there’s definitely something here!

Really appreciate the support! :)

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No worries! Noticed you are in SA too so you’ve got my support haha.

Yeah any unique systems that feel rewarding & add a little excitement to the mix can help make a good game a great one!

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Oh nice! I'm used to assuming 'Australia' on the internet just means Victoria or NSW haha
I'm yet to get involved in the local indie dev scene but I've been looking into it lately, and there might be something we can meet up at!