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Familiars have a max level of 30, and are leveled up by using other familiars as fodder. Leveling up a familiar boosts their base stats, and once they reach level 30 it is possible to evolve them.
Leveling up a familiar is simple; go to the leveling screen, and it is the first (top) option chosen. Select a familiar and any number of fodder familiars. You will gain bonus experience if the fodder familiar is the same element.
The gold cost is directly related to how much experience you are adding to the familiar.
The peapod familiars are specifically used for leveling up other familiars, and provide much more experience than an ordinary familiar of the same star rating. They are rewards from a variety of quests, game modes, and missions. Earn as many as possible to level up your team quickly and efficiently.
Once a familiar reaches level 30, you will not be able to level it up any more, and it will appear as dimmed on the level up screen. Evolving the familiar will increase its star value and reset its level to 1, allowing you to level it up again.
The game provides several safeguards from accidentally foddering a familiar. These methods will provide a confirmation prompt when you attempt to select a familiar to use as fodder, allowing you to cancel your selection.
The most secure method is to explicitly lock the familiars you want to keep. Open the familiar's info screen, then tap the box in the upper left so that the lock icon appears. Tap on it again to unlock it.
If select this familiar in the fodder screen and hit "accept" on the confirmation prompt, the familiar will be unlocked for you automatically and added to the fodder list.
A familiar that has been boosted in some way (awakened, star value increased, etc.) will also prompt the confirmation screen to appear. Note that this confirmation screen will be presented over the locked-familiar confirmation screen, if both conditions apply.
Note: You cannot use a familiar as fodder if they are equipped by any of your classes, in any of your deck loadouts. If you find yourself unable to use a familiar as fodder, make sure to check your subclasses to see if it's still equipped somewhere.