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Species are unique lifeforms on the genetic level. Each species has specific characteristics and environmental tolerances with their midpoint being their founding Empire's homeworld. Each Empire can start with new or existing primary species. Through Genetic Modification Empires can affect their species environmental tolerances creating sub-species. Populations of different subspecies can co-exist on colonies. They could be aliens, or a genetically modified species under your control.
Keep in mind, that there is a difference between the Race\Empire you are playing and its founding species and its sub-species.
When an empire has reached a certain level of technology, they will have unlocked the tools necessary to modify the genetic code of their population. Genetic modification allow to design new sub-species that can ideally live or better cope with previously adverse environment, allowing you to colonize a greater range of worlds. Once changes are introduced into the population genetic code. The new sub-species will continued to increase their own numbers, breeding their own populations.
For example, if you're attempting to fully colonise Mars (which has a lower gravity than Earth), you can make a Human sub-species that prefers the lower gravity. Creating subspecies can reduce Terraforming time, especially on planets such as Mercury or Pluto.
Creating a new Sub-Species
To create a new species, you must first research Genome Sequencing in the Biology Tab, followed by the adaptations you want. These can be chosen from Temperature variance (+ or - a percentage), Temperature Range (+1,2,3 degrees etc.), Oxygen Levels (+ or - a percentage) and Gravity Tolerance (again, + or - a percentage). This allows you to custom make a sub-species, to do that use the Create Research Proejct Ctrl+F6
Once you have researched the new species, you need to use a Genetic Modification Centre to turn the population of a colony into the new species. Species will continued to increase their own numbers, breeding their own populations. This, combined with the Genetic Modification Centre], will ensure that, however slowly, your entire planets species will be changed to the new species.
You cannot genetically modified a previously modified species, only a base. For example, you can drop Human Temperature Tolerance by 20% to create Homo Artcis, but you cannot drop Homo Artcis' Temperature Tolerance by a further 20%.