I just asked my friend who is a lvl2 like me and in his cup their are teams of lvl 3-4 and even 5. He bought 1000 tokens and improved his team the previous season so I truly think the cup is based on your teams strenght and not only on it's lvl.

Is there anyone who can explain me on what it's exactly based? Average star rating, Q of best 14 of team worth?
Or does anyone know where I can look for this information?
Thanks in advance.