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Got stuck on the level that introduces the possession function (E). I tried turning on the magnet and then letting it pick up the electric-looking substance from the balloon (?) but nothing happened. I have no idea what is going on in that level or what the blue orbs are. 

Thanks for reply. soul shards (blue orbs) will be used for the death trade.

we introduce the use of them later in the game.

one mechanic we didn't mention that is when you press E again and come out from object.

the closest wall will be your ground. 

you can end level while you are in box too.