The art here is charming - although sound would have been nice and would have really doubled-down on the slightly Caste Crashers-y comic art style as well as helping players understand the mechanics (for example a different sound for losing health through damage and a different sound for losing health through max HP bar contraction). I really like the overall concept here and it's a shame I didn't get to play it with another human at the other controls.
I think for the central mechanical conceit to work, consider making the arena much bigger (4x-5x?) so that there is a lot more leeway, but give players lots of incentive to stray into the middle (e.g. loot etc.).