Most of the adoptable sites I've seen do use .gif for their image compression; so I assume they're using the GD library.
But Squiby uses .png images. Do they perhaps use a different library (Like ImageMagick or something). Or maybe they convert the image that's written to .png from .gif.
At the moment, I have my adoptables displaying the Name, Owner and Number of Clicks it is underneath using GD- it's then written to a directory as a .gif when the script is run.
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