Since Mojang is going towards a philosophy of incentivizing more eco-friendly and cruelty-free practices (hence why killing the Armadillo doesn't drop anything), it'd be great if they added mushroom leather as an alternative to make items that would otherwise strictly require players to kill animals. Mushroom leather is a real life alternative to animal leather, so it's not just complete fiction. The mushroom leather would serve the same purposes that current leather does for crafting and trading. It could be either crafted with any or specific fungi.
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