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I know how tiers from Bronze to Diamond work, but I'm not sure how Master and Challenger tiers work.

Is Master tier composed of 5 divisions as well? How many people can be in Challenger at one time?

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Master and Challenger Tiers work a bit different from the others (Bronze-Diamond).

First of all there is only 1 division in both but there is no upper limit in LP. Also the promotion from Master to Challenger happens automatically. Every 24 hours the MMR is checked and as soon as someone in Master has a higher MMR than a certain Challenger player he will take his spot.

In Master there is no player limitation but the Challenger tier is limited to 200 players.

Also in both of these special tiers LP decay happens a lot faster than in Platinum/Diamond. In Plat/Dia LP decay starts after 28 days of inactivity and drains LP every 7 days after while in Master/Challenger LP decay starts after only 10 days and drains LP every day after.

You can read more in the Riotgames Ranked-Play FAQ

Reaching master or even challenger proves that you are amongst the absolute elite in your current region. The skill difference between Challenger and Diamond 2 is usually bigger than the difference between Bronze 5 and Diamond 2 because it requires you to master absolutely every aspect of the game (or your main champion).

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    +1 for the skill comparison. Maybe a bit exaggerated though no? – dyesdyes Feb 27 '15 at 11:08
  • @dyesdyes no not at all. If you think about it: there are people with 1200 LP in challenger which is basically 12 divisions (or 2.5 tiers) and this is at the highest level of play. Also in diamond 1 you will gain a lot less LP per win (about 4-7 with a normal MMR) to until you get to master and then you still have to get to the top of the master tier to reach challenger. The skill difference is enormous. – Jutschge Feb 27 '15 at 11:13
  • it doesn't check the MMR, the LP is checked. for me at least MMR is not the same as LP – DropDeadSander - EUW Feb 27 '15 at 12:49
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    @Jutschge That's not true. Since the introduction of Master tier, the LP gain in Diamond 1 is the same as in other divisions. The huge skill difference used to be between high and low diamond 1 since clamping happened, but now it is in the middle of Master tier (ie, top Master used to be top d1 players, while bottom master used to be d2/low-d1). There is far more difference between d2 and b5 than challenger and d2, and it mostly comes down to game knowledge and execution rather than mechanics. – ChypRiotE Feb 27 '15 at 13:03
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Master and Challenger are single division. There are 200 players in Challenger, while there can be an infinite number of players in Master (currently 600+ on EUW).

Once you reach Diamond 1 100lp, you have to win a bo5 to get into Master. You start there with 0LP, and earn points for each win, just like anywhere else. However, there is no stopping at 100 (top players in EUW have ~400lp). LP are not limited in Challenger either, with top players currently behing ~1200LP on EUW.

Every 24h hours, the top Master players are promoted to Challenger, while the lowest Challenger players are demoted to Master. The amount promoted players depends on their MMR compared to the ones of the lowest Challenger players.

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