Raising and battling beetles is mostly just for fun and as something to collect, but sometimes if they win you can earn herbs and SB! When beetles die they also leave you an item in your inventory that is similar in appearance to them known as a Death Item, which will one day be used to craft decors. If you'd rather not battle them, there is a nice market for beetles in the trading center, so some people just raise and breed beetles to sell them.

More info about battle beetles and what they do can be found in this guide here! :)

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