The problem is the giraffe flooring. Can you change it? And I don’t understand what is happening under the staircase.

Yes, we plan replacing the floor throughout basement. Below the staircase is a running waterfall with stone base (plan on removing this as well).

When I saw the picture, "giraffe" was also the first thing that came to mind. Since the photo is a bit fuzzy, it's hard to tell exactly what is going on with the oak siding. Assuming you have no water issues, I would keep the wood and refinish it, if necessary. Wood and other natural materials are great to warm up a basement space. It also looks like a warmer white on the ceiling would better complement both the oak and the fireplace.