It creates a many tiered system, but it gives players the experience they want, or deserve.
That sounds bad.
The system naturally evolves to where players who just want a clean, more fun than ultra competitive, gaming experience have their own space, those more competitive have their own space and those cheating tend to effectively end up shadow banned, a situation current machine systems do not enable, some players can be disruptive not just from cheating but in other ways as well which machine systems won't catch on to.
That doesn't solve the problem though, your game is still going to be full of cheaters.
All you're doing is distributing them around, so most of them are in the 'low tier' but all you're doing is mixing them in with new players - which will kill your game from the start.
This is why automation and machine based anti-cheat has been so overwhelmingly successful, because it provides a consistent experience.
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