This page will go over the workings of gradual evolution in-depth. Please be warned that this section goes into advanced details.
You may notice that as your Chao grows older and approaches its first evolution, it starts to slowly change in shape and colour. This process is called gradual evolution. This gradual evolution depends on the Chao's recent interaction with animals, and it indicates what its first evolution will be!
The above diagram illustrates how this works. There are two sliders, which we nickname Swim ↔ Fly and Run ↔ Power. A Chao starts off with both of these sliders in the middle position, which represents a balanced, Normal Chao. As you give animals to your Chao, the sliders will start to shift towards the appropriate direction. For example, if you give a Swim animal to your Chao, the Swim ↔ Fly slider will be pushed slightly towards the Swim side on the left, and if you give a Power animal to your Chao, the Run ↔ Power slider will be pushed slightly towards the Power side on the right.
After giving enough animals of a certain type to your Chao, the corresponding slider will reach the far side that matches that type. For the Swim type, this would be the far left side of the Swim ↔ Fly slider. Once this point is reached, you cannot influence your Chao any more towards that type; it is already as focused on that type as it can be. You can still give animals to your Chao, of course, but it won't affect its gradual evolution at all.
You should have seen by now that the four types are divided into two pairs, each with one type on the left side and the other type on the right side. This means that each type is the opposite of another type and cancels that type out. For example, if you give Fly animals to your Chao, it won't just be influenced more towards the Fly type — it will also lose its Swim type influence. This means that you can always control your Chao's gradual evolution, and it is never permanent.
When your Chao finally reaches adulthood and enters a turquoise cocoon for its first evolution, the ability type that it will evolve into depends on these Swim ↔ Fly and Run ↔ Power sliders. Take the above diagram, for example: the two sliders indicate that the Chao is focused most heavily on the Swim type, and so it will evolve into that type.
The Swim ↔ Fly and Run ↔ Power sliders are hidden numbers which range from -1 to +1. -1 represents the left type (Swim or Run), 0 represents the Normal type, and +1 represents right type (Fly or Power). They are both reset to 0 when a Chao hatches or evolves.
Each animal from the yellow, purple, green, and red groups shifts the relevant slider towards the appropriate direction by 0.1. For example, a Swim animal will subtract 0.1 from the Swim ↔ Fly slider. Animals from the blue group will randomly affect the Chao, shifting one of the two sliders by 0.1 towards either direction.
If a slider has a value greater than -0.5 and less than +0.5, then it counts as the Normal type. Any value outside of this range will count as the appropriate type (for example, -0.8 on the Swim ↔ Fly slider counts as the Swim type).
A Chao can only evolve into one type for its first evolution. If the two sliders are both in the neutral position, then it will become a Normal type. Otherwise, it will evolve into the type matching the slider that has the largest (positive or negative) value. For example, if the Swim ↔ Fly slider is at -0.6 and the Run ↔ Power slider is at +0.8, then it will evolve into the Power type as that value is furthest from 0.
In the rare event that the two sliders have an equally large value (e.g. 0.7 and -0.7, or 0.9 and 0.9, etc.), then one type will take precedence over another. The Normal type has the lowest priority. The Fly type overrides the Normal type. The Run and Power types override the Fly type. The Swim type overrides all other types.
Adult Chao also go through a gradual evolution; this is commonly referred to as second evolution. For the most part, it works in exactly the same way as it does for child Chao. However, there are a few differences.
For an adult Chao, each animal from the yellow, purple, green, and red groups shifts the relevant slider towards the appropriate direction by 0.05. For example, a Swim animal will subtract 0.05 from the Swim ↔ Fly slider. Animals from the blue, gold, and black groups will randomly affect the Chao, shifting one of the two sliders by 0.05 towards either direction.
This means that it takes twice as many animals for an adult Chao to reach a full gradual evolution, compared to a child Chao.