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i was breeding her mom (she and mc both had 6 hp and 2 dmg) and this is the example of stat upgrade (it is very rare tho, probably need a big breeding project to get this way going) and here is what i meant when i mentioned mc stat "upgrades"
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mc stats are a bit higher shortstack, bred them together and got an offspring where it's stats got higher to match mc's (it's not always going to top them up, might need to breed a generation or two to get an upgrade)
Edit2: Also the traits seem to always pass down/upgrade, so that's probably the replacement for the old "no limit stat upgrade" system, while these are capped, having double hp/dmg 100% crit rate and +100% crit dmg is pretty sweet