Let's come up with an amphibian race!

No, you need to think about something else here; this option is unlikely to work because the crocodiles would be like the Garagons in Might and Magic III, but 100 times more effective. The percentage of units "eaten" needs to be based not only on quantity but also on level, because there will always be more than 5, 6, or 7 units, and those are the ones that will suffer.
I wrote to Andrei in a private message to make the percentage of units "eaten" some value, and the number of "eaten" units should not be more than 10% of the total, but no less than one.
Next, we need a formula to calculate the probability of this happening. Let's say the overall chance is 15%, and it can be reduced if the army is larger or equal in size, or if the army is 1, 2, or 3 levels higher.
I think this would be more appropriate.
Please also consider one more thing: notice that almost all units of levels 6 and 7 are balanced, perhaps except for the humans; they have angels and paladins that are strong, but the angels are weaker than the Shadow Dragons, but the paladins are stronger than the Matriarchs. The same is true for the elves. So, if the Krakens don't have a counter to their attack, you need to make the 7th-level unit weaker.
If you are interested in my ideas on this, I can try to objectively evaluate all unit types in comparison with others.
P.S. You asked for help :)