A guild gets moved to Diamond where they find they can not fight. It takes a vacation but does get its 40 fights in allowing it to move down to platinum. Next league it does not have its 40 and is removed from GBG... This is the quickest way to reduce the size of Diamond.
It is not about moving up from copper or silver as guilds have found they need only 40 fights to keep active. Those leagues have many that do not finish one tile. Even the strongest sometimes just run all tiles around their home base up to almost done. Guilds have found they can hold up and not advance. That controls upward movement now. Number of active guilds on my mature worlds has not changed since this time last year. Interest in GBG has. It has fallen. GBG is a broken feature to weaker guilds. Bad rewards at the lower leagues. No reason to compete. Treasury costs pure insanity. It is much easier to just, in Silver, farm the 3-4 tiles at your base to almost done for the 207-276 fights watching the other guilds and closing only if you will stay in Silver.
Your system doesn't "keep the guilds down" - if everyone's doing that in Silver, *everyone* moves up (The 8-way tie at 0 has everyone advance as 1st if it happens that everyone did their thing without taking a sector).
If some people aren't stopping short of taking then *someone* still moves up, so the points are secure. It's also not really all that common from what I've seen.
It's not about what happens to a specific guild, but the count of guilds. There is no common behavior where guilds can get together and decide to shrink diamond - there's artificial behaviors to further inflate diamond (lots of little guilds doing the n-way tie at zero would pump many *more* points into the system for instance! If you say took 40 1-man guilds committed to starting that the same week, they'd find themselves in the same group often, and some of em might even make it to diamond without ever taking a sector because of that! But even if they don't make it that far, every week that 2+ of them wind up in the same group, they pump more points into the system by having an active-guild-tie.
As for "staying where one belongs", that takes two guilds - you move the fighters to the guild in the division you want to be in, while the other guild loses the round doing nothing. Actually tried that for a bit. Wasn't worth the headache - didn't have the people who wanted the easy fights doing more, just more work for me. Again though this does not shrink diamond - because it's just an extra guild as far as the steady state is concerned.
The best one could do if one wanted to be a "force for shrinking diamond" is to create a copper guild - fight like the devil for 1st every season to high platinum or diamond, and disband before your high platinum or diamond season begins so your points gathered vanish rather than support diamond. And create another copper guild, repeat. But who would want to do the work on that?
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As for "guild quits in platinum", if that's what's happening then yes that would show in diamond sooner. But what if for a few seasons after the drop to platinum they half-heartedly keep doing at least their 40 and drop to gold. or maybe silver. before going inactive and getting removed; then they've returned most of their points to the system and their absence will take many seasons to propagate up in terms of what the change to the steady state would be. I'm not sure anyone has asserted "how" the guilds that have quit quit.