When testing the animated overlays on IOS we found the best way is to make animations is by using professional grade software like Adobe Premiere Pro and exporting as an mp4 using the H.264 format.
Even though this may be a slight extra cost, it worked successful on iPhone 12 Pro and above on IOS 16 with the current version of the app 1.6.2.
If you are looking for some neat animations to put on your animated overlay here is a link to motion array!
https://motionarray.com/motion-graphics-templates/emoticon-animated-emojis-pack-827320/?listing_position=15
*still waiting on the new Android update to test on Android devices*