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You can equip up to 3 familiars at a time. Each familiar has a passive skill, such as increasing defense or reducing the skill cooldown times of same-element familiars in your build, that is always present and boosting your character (unless it specifically has an activation and cooldown). One of the 3 familiars is active, and will attack the same enemies you target with damage that matches their element. Each familiar has a skill that can be activated just like your attack skills. Activating it to do a broad variety of effects; this will put it on cooldown.
Additionally, there are two game modes that use familiars to fight other teams of familiars; these modes provide numerous useful rewards.
Familiar base star levels range from 1* to 4*. There are two classes of 4*, normal and rare; the rare ones will have a sparkly blue background. The higher the star level of a familiar, the better their base stats are. However, a leveled up/awakened familiar of a lower base star level can still outclass an unleveled higher base star level familiar. It is also easier to level up/awaken lower star level familiars because of how much more common they are. When building your teams, you should consider the base stats of a familiar, the final stats of a familiar, and how easy it will be for you to get there. Early and mid-game, a mix of 3* and 4* familiars in a team can provide a lot of power and utility without requiring a lot of time or money to acquire. As you reach into higher levels of story and combat, you will want to field a full party of 4* familiars.
Each familiar has three skills; an active skill that can be used in battle and has an associated cooldown timer, a passive skill that's always active when you are in the field, and a skill that is used in of the the familiar-specific gameplay modes (Adventure and Arena.)
Skills are leveled up by increasing the familiar's awakening levels. Note that not all skills are boosted at each level, and not all levels boost the power equally; check the awakening info screen to see the exact boosts that happen at each level.
With 3 slots for familiars in a build, you have a lot of choice to customize your loadouts to suit your playstyle or the content you are facing. In PVP mode, you may favor familiars with debuffs or a stun ability. When fighting bosses, you might lean towards familiars that boost your defense or can heal you with their active skill. When farming for materials, a set of strong attackers can take things down more quickly so you get more drops.
Your equipment may also boost your familiars' output -- some equipment can boost the stats for familiars of the same element or type. There are a lot of ways to build up synergy to boost your combat power and fighting potential.
Take advantage of the deck loadouts to quickly swap between teams. These can be element focused, content focused, or both -- you have 10 slots to play with.
Remember that there are numerous modes in the game and numerous ways to create a build, and that familiars should be graded and considered in specific contexts. A familiar that is great for an engineer fighting a boss may not be useful for a rogue who is taking on PVP battles. Find the familiars and builds that suit your playstyle and the content you're tackling. You'll eventually want to max out as many 4* familiars as possible for the most flexibility in building decks against content, but focus first on the ones you plan to use immediately.