Challenges are weekly events that you can participate in by playing the game and completing a specific Challenge mission.
Challenges always start at the end of the week on Friday and last 66 hours. When a Challenge begins, all players are divided into groups by level and compete with each other.

To enter a Challenge, click on the purple flag with a gem in your dungeon; on the flag, you will also see your current place in the Challenge:
Note that the golden gem is always displayed on the Challenge icon and DOES NOT INDICATE the reward you will receive at the end.

If the Challenge has not started yet, you will see the following icon:
By clicking on it, you can see your results in the previous Challenge:
Players in Challenges are divided into 5 groups by level:

Level 1-10
Level 11-20
Level 21-30
Level 31-40
Level 41+

However, the level of the player is taken into account only at the beginning of the Challenge during the formation of the groups. If, for instance, a level 10 player reaches level 11 during the Challenge, they will remain in the first group.
Leaderboard and rewards
The reward for participating in the Challenge depends on the level of the group. The higher the level, the larger the reward will be.
On the Challenge screen, you can see your current place and reward.
While this screenshot shows only 4 possible rewards, there is also, in fact, a fifth one. It is a consolation prize which you can view by tapping on the question mark icon near the rewards.

Players on the leaderboard are sorted by place. You can view the leaderboard by scrolling down in the Challenge window.