Basic Five Elements/what do they mean?
Fire
Water
Earth
Wind
Lighting
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Fire Release: is one of the basic elemental nature transformations. It is performed by molding superheated chakra inside the stomach before releasing it via the lungs and mouth. There are also variants to this in the form of some mediums such as the use of gun powder, explosive tags and chakra flow into a weapon. Commonly affiliated with the Tiger hand seal, Fire Release consists of mid to long-ranged offensive techniques that cause combustive and explosive damage. The chakra nature is common among shinobi of Konohagakure in the Land of Fire with the Uchiha clan holding a natural affinity for it. Amaterasu is stated to be the highest level of fire nature transformation.
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Water Release: is one of the basic elemental nature transformation techniques that allow the user to manipulate pre-existing water, or create their own, by turning their chakra into water. It takes much more ability to create the water outside the body than to manipulate what is already available or expel it from their mouths. One of the most versatile of the five basic chakra natures, Water Release techniques can not only change shape but state as well. Moreover, the water becomes more solid in the process as well. The water affinity is seemingly more common amongst shinobi of Kirigakure. The offensive water techniques commonly appear to do damage from the sudden force that they exert, which would cause massive internal damage to a human.
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Earth Release: is one of the basic elemental nature transformation techniques and allow the user to manipulate the surrounding earth for offensive and defensive purposes or create it; be it dirt, mud, or rock. Earth Release techniques have the ability to change the strength and composition of the earth from being as hard as metal to as soft as clay, as well as manipulating their density, making them heavier or lighter. This includes allowing the user to travel through ground and rock in various ways which can be essential for both transportation and for setting up attacks or creating defences or for offence. Indeed, this makes earth techniques one of the most versatile of the elemental techniques. Pre-existing earth is not necessary though, for the user can create it with their own chakra. Earth Release affinities are the most common among the ninja of Iwagakure, and is commonly affiliated with the Snake seal and/or slamming their palm onto the ground
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Wind Release: is one of the five basic elemental nature transformations. It is performed by making chakra as sharp and thin as possible. Wind Release is mainly short to mid-ranged offensive techniques that combine brute force and keen precision to deal cutting and slashing damage. A rarity among the five chakra natures, wind techniques are usually performed by generating air circulation and can be enhanced through this method as well. Wind-natured chakra can also be channelled into blades to increase their cutting power and overall range.
Lightning Release: is one of the basic elemental nature transformation techniques that allow the user to generate lightning by increasing the high frequency vibrations of their chakra, allowing for piercing damage and fast movement. The electricity paralyses the target so that they are unable to move and leave them vulnerable to a finishing strike. While uncommon, lightning can be infused into bladed weapons in a way similar to Wind Release through chakra flow for increased the piercing power through vibrations, with the added effect of inducing numbness. When the technique is released from their bodies, and thus not requiring physical contact, it does not move as fast as true lightning. Instead, due to the control the user has to exert over it, it moves far slower, which can give opponents time to still react. Lightning Release is common to the ninja of Kumogakure
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Strength/Weakness Elements:
Fire is strong against wind because the air feeds the flames but weak against water because it cools and smothers them.

Water is strong against fire because it naturally extinguishes the flames (though a sufficiently powerful fire technique can cause evaporation) but is weak against earth because earth structures can dissipate the force of water rendering the technique less effective.

Earth is strong against water but weak against lightning because it can easily travel through and break the ground apart.

Wind is strong against lightning because it is a natural electrical insulator but weak against fire because the flames are fuelled by air.

Lightning is strong against earth because it can easily travel through and break the ground apart but weak against wind because it is a natural electrical insulator.
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How Should This Work In Character Creation?
Players should decide which element they would want to even choose at the beginning of the game. A small tutorial will show users on how the elements look like in combat, and a description of the strength and weaknesses of the element. this is so that. players who pick there element, know the strength and weaknesses before hand. So they can't complain that they didn't know that lighting is stronger then earth but weak against wind. Character Creation will be important to the player on how they want to start there journey off with the right element. There should be a small list of jutsu on the side of the element or a small tutorial on what the players can expect from the jutsus that they will learn further on in the game.

What about clans?
Players who start off in a clan should start off with two elements of their choice, however, they won't have access to having a third element like the rest. This is due to them already having two elements to start off with, plus have a kekkai genkai to their advantage.
Examples are:
Uchiha: Can see Genjutsu, copy jutsu from others , and place people under Genjutsu.
Hyuuga: Can see far away, skilled at taijutsu more then other.
Aburame: Can drain other people chakra using bugs, etc.
My suggestion for their disadvantage as well, only using these three examples.
Uchiha: They can't copy jutsu unless they have that element to begin with.
Hyuuga: When they use bayakugan, there third person will be moved to first person, and the screen goes gray and white and able to see through the area on a limited range.
Aburame: The bugs can only drain small bits of the chakra meter, and add that small bit to their own chakra meter.
also the bugs are able to be seen, on the screen clearly, so we don't have to squint our eyes to see if that is a bug or a dust particle in the air xD.

Well this is all i got. if you like this, 1 rep me. if you want me to make more suggestions
on other topics, just reply below and i will start doing so. anything to help this mmorpg improve xD