The rules are currently in the process of being created. If you want to make a suggestion to the rules, feel free to give your idea's.

Grand Prize: 1600 Microsoft Points
for whoever gets 1st place in the tournament; offer only good if we get 20 or more contestants
(refer up to 5 people to this tournament and receive 800 microsoft points)

I've just put together some quick rules, I am open to change them upon request.
The tournament will consist of 3 rounds (or 4, depending on how many people we get):

Round 1
Everyone will play in three 1-on-1 battles.
The top winners will proceed (depending on how many contestants, it could be the top 8, 12 or 16). In case of a tie breaker, there will be an extra round between the tied contestants to see who proceeds.

Round 2
This round will consist of 4 person battles.
If 8 proceeded, there will be 2 groups battling, if 12 proceeded, 3 groups, and if 16, 4 groups. Each group plays until 1 person from each group has received 2 wins, and that 1 person proceeds.

Round 3
This round only takes place if there were 12 or 16 contestants that proceeded from round 1.
If this is the case, there should be 3 or 4 people left. If there are 3 people left, each battles each in a 1-on-1 battle and the person with the most losses does not proceed while the other 2 proceed to final round. If there are 4 people left, than there are two 1-on-1 battles, the winner from each proceeding to the final round.

Final Round
The last 2 contestants battle each other best out of 3.