Honor gain:
People gain honor for one victory per each challenge x time per server day (server dictates when the day starts). E.g you beat mac’s challenge and get 4000 honor before 4am est(server time in which the day starts). You cannot get honor again with that challenge till after 4am est.
People gain a tiny amount of honor for losing, basically something under 50.
Honor Usage:
Idea 1: Science trees that have specific research topics that can be improved non stop, but each time improving the same one costs a lot more honor.
E.g. One research topic in the science tree is imperial shielding regeneration. Improving this improves shield regeneration for imperial ships by 5%. Another research topic could be related to one type of module or weapon class or most can be general improvements.
Idea 2: Bonuses that cost honor which can be applied to any unlocked hull/module and only apply to that hull/module type. The bonuses could be simple things like +x% to that specific shield shield regen all the way to more specialized ones like adding the ability to improve a weapons range or making the weapon decrease enemies movement or with enough honor even adding a slot to a hull.
Idea 3: Nothing as special as the above. Just adding many more modules/hulls that can be bought through honor and used in challenge mode without any mods. Some of the hulls could be a bit more specialized and the modules could be a bit different (range extension).
Issues with this overall design
first issue Obviously someone who has used 100000 honor (difference between usage and accumulation) on improvements will have a much easier time defeating challenges than someone who hasnt spent any honor. To try and limit this players could have the options of which honor bracket (honor brackets are based on amount of honor used) can try their challenge or penalties in honor accumulation could be put on players who are in a much higher honor bracket.
second issue Much harder to balance all possible customizations.