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Good to hear you're on top of things.
I admire your vision of omitting animations all together and rely solely on physics.
Having some physics programming experience I know it's pretty hard to get it working exactly the way you desire. Plenty of odd cases where you find it necessary to lend a leading hand to the simulation. If you manage to strike out a good blend there I see this working out pretty damn good.
This is pretty cool and innovative.
Don't know if you guys know about the Overgrowth project, but in there they've made some pretty amazing character movement behavior and is well worth to study.
The algorithm look pretty advanced and I'm sure in takes all kinds of parameters like kinetic energy etc. into consideration. If I were to put the finger on something, for me the character leaning seems a bit odd. It's like you have a section of code in there that takes the ground normal into consideration and apply the inverse rotation of the delta between the normal and direction up. Maybe that's how we bipeds tackle uneven terrain, but in this case I think the algorithm overcompensates. Dialing that effect back a little would look better IMO.
I working with this engine and can elaborate a little.
The framerate stuttering is most certainly due to the HD of the system this was recorded on not being able to keep up. In normal situation there is no stuttering.
Both DOF and Light Scattering effects have lots of parameters that can be adjusted.
Good to hear you're back into active development!
Great stuff you got here and the crafting part already looks quite polished. Looking forward to a demo with that.