Well, it's not exactly a new idea... :) I think I've seen similar suggestions somewhere.

There's a simple option: we divide into two sides, dark and light.

We gather a limited number of players (about 8 per side) and determine who is better in 1-on-1 duels.

And the most challenging option: we divide into factions (in Heroes of Might and Magic III, there would be 9 teams in total :)), gather players for each faction, and fight according to a bracket system.
The losing team is eliminated, and this continues until the last team remains :) This would be intense and exciting.

We need to find a consensus in general.