One of the eggs hatches into / in a caterpillar. One of the eggs breaks / breaks in (into ) a caterpillar. (But poor English really) One of the eggs turns / turns into a caterpillar.
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New2grammaris hatch a good word for describing coming out of a cocoon?The caterpillar doesn't come out of a cocoon. The butterfly does. I would say that the caterpillar hatches from the egg, and the butterfly emerges from the cocoon.