Thank you very much for feedback!
I'm not exactly a math guru either and I agree, it's hard to grasp without seeing the numbers, that's why I tried to give some simple examples.
I hope to collect more feedback for another day or two and then try to come up with an actual formula with the help of @kalkulus and then pitch it to Cryptomancer and Yabapmatt. Best case they'd be willing to work out the exact numbers together.
You are correct about the Arena, though, we will have to figure out how that's going to work with the potential new system. Maybe it could be linked to the flat bonus for playing in higher tiers.
Frankly, I think it won't be easy to come up with an ideal solution, but I feel like we need to figure things out or this is going to haunt us for years to come.