1) This is PvP, it's a bit more dynamic than the arena. It's rock paper scissor, sure the level 900's defense set is better than the 600's defense set, but if the 600 goes for the right set he can win. And 600 is above the 25% threshold so would be under a penalty.
Yes, but also unlike the arena, it's not 1 set locked in. If I can beat both your damage and your attack (either one at a time) I've got a great chance to 10 - 0 you. Why? Because I'm just that fast, and so are other good bounty hunters.
2) So on the board rating transfers of 1 to 4 are 0? Makes sense.
Yep, exactly. Or just let it randomize 1-4 to grant 1 rating 25% of the time.

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