XSplit has a similar feature, transparency is enabled automatically if not, you should be able to find it in properties.
There are 3 methods for importing content. The easiest and most popular way to import is by using the Steam Workshop.
If you are creating your own avatars or building your own spritesheet, please read over Creating Avatars
The last method is importing content that was exported from Stream Avatars.
Rules and Guidelines:
This sprite is 8x9 (grid lines are not saved in the final image)
This sprite is 24x24 and has a custom animation "sleep" (grid lines are not saved in the final image)
Navigate to your data folder by clicking the "Open Folder" button inside Stream Avatars.
Drop your avatar .png spritesheet into the avatars folder.
Click the "Save and Reload" button.
Change the width and height to be the correct frame sizes, in this case 24x24, and then click "Apply". Now you can scroll down the animation list to edit the custom animation for custom1.
Change the custom animation name to be "sleep", this will allow users to type !sleep to play it.
I also enabled the Animation Loops toggle in "Advanced", and set the number of loops to be over 60 so that the animation loops until another command is issued.
Select your avatar and then click the Palette editor button.
Create the "Main Palette". You do this by adding the color boxes and selecting the primary colors of your avatar. There is an eyedropper tool to assist in acquiring these colors.
Create a new Palette by entering a name and clicking "Create".
You can now adjust the colors to swap correctly.
Optionally, you can have gears use the same palette swap.
Navigate to your gear folder.
Create a new folder.
Add gear to the folder.
Allow the avatar to use the gear.
Select the gear.
If your gear piece is animated, make sure you select IsAnimated, and set the width to the proper frame size
Frame anim is used if the gear item has a frame for each frame of the avatar that will be using it.