XS Points: My Original Tournament Concept
When I got back into Yu-Gi-Oh through Duel Links, I developed a habit of mentally counting how much excessive damage I was doing to my opponents at the end of each duel. If, for example, my monster finished the duel with a direct attack, and its Attack Points were equal to my opponents remaining Life Points, I would call that zero excess (or 0 XS). If my opponent had a measly 100 Life Points left and I took them out with a direct attack with my 4000 Attack monster (I know that's overkill, but it totally happened), I saw it as winning with 3900 XS Points.
So then I asked myself: could this be a new mechanic somehow? Obviously, these XS Points are determined at the end of the Duel when the outcome is decided and nothing more can happen. So this hypothetical mechanic would have to apply to something outside of the Duel.
That's when I thought about tournaments, specifically the tried-and-true bracket system that randomly pairs up participants in a series of elimination rounds. One of the biggest flaws with this system is that the winner is partially determined by luck and doesn't entirely measure a duelist's skills against all the participants. One person could be so immensely skilled that anyone paired up against them will get eliminated no matter what they do. That doesn't necessarily mean that the loser was a terrible duelist, but one would never know based on how quickly the prodigy took them out. Then there's all the behind-the-scenes shenanigans (i.e. cheating, melodrama, last minute emergencies, world threatening crises, waking up late) that can get a duelist eliminated without really measuring their skills. The final winner could be some jabroni who wouldn't have even gotten close if they actually had to duel someone with actual skill.
XS Tournament Format
The rules are simple: at the end of each Duel, the winner is assigned XS Points based on how much damage they dealt to their opponent minus that opponent's remaining Life Points, whether it was done through Battle or Effect damage. Then, after all participants had a chance to Duel each other, each participant's XS Points are tallied up, and the Duelist with the most cumulative XS Points wins the whole tournament.
In this format, the mentality changes from simply "winning a duel" to "winning while doing as much excessive damage as possible." Technically, you could still just win with zero XS points, as that would deny any XS points to your opponent. But then you have to keep yours and your opponent's overall tallies in mind and decide whether or not to risk it by waiting for another turn to win with XS points, which would allow your opponent an opportunity to take the victory.
This also means that the final outcome can change after every duel. One participant could lose all but the very last duel, but that last duel could earn them such a huge amount of XS Points that they end up winning the whole tournament. Conversely, someone who was consistently winning but only garnered small amounts of XS Points per duel could still lose the whole thing.
Advantages
A format like this would allow for a smaller number of participants. A group of three minimum would be enough, so you could just host an XS Tournament with your friends on the spot without having to look for extra people. An extra person could hop in at any moment, or a participant could leave at a moment's notice, and the tallied scores would remain unaffected.
In an anime tournament arc, this would relieve the need to invent fodder characters just to fill in a bunch of empty slots and minimize filler duels. And while the behind-the-scenes shenanigans I mentioned earlier are still at play in a more formal setting, this avoids default victories since neither duelist can get any XS points without a completed duel.
Disadvantages
Admittedly, this format would become more cumbersome the more participants there are. The bracket system has an elimination rule so that tournament arcs don't go on for too long by showing off every combination of duelists. Just to give you an idea:
2 duelists=1 duel (no tournament needed)
3 duelists=3 duels (tournament?)
4 duelists=6 duels (comparable to a regular tournament)
5 duelists=10 duels
6 duelists=15 duels
7 duelists=21 duels
I could go on, but at this point we're clearly past the point of arc fatigue.