The arena determines the number of frays available for guild members to play in the Brawls, the max tier the guild plays in and the Crown rewards received.
By upgrading the Arena, the guild can earn more Crowns and more members can participate in Brawls.
The leader of the guild has the option to move the guild to a lower tier (and back) to face weaker competition, but the rewards and the number of frays are reduced as well.
Related:
Splinterlands Website
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