How exactly does the ranking system work?

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I enjoy playing skirmish from time to time but am frequently dishartened by the observation that everyone worse than me seems to have been chased out some while ago.
We have recently had beta tests for a revised ranking system for v1.2.12 and after being placed Gold I there instead of my usual Bronze I I have taken heart that there are more players who are interested in skirmish and are just demotivated by the way they are matched.

I am really interested in how exactly the ranking system works. I think it should take into account when most other players have a different rank than yourself or when you perform really well but it does not feel like it. Maybe it cancels out. Does anyone know how matchmaking should work if there were enough players to make it work?

I have also compared the rank distribution of players in Bannerlord vs League of Legends (as an example of a successful ranked game) and found the following:
In LoL ranks seem distributed exponentially only for the very top ranks but roughly equidistributed where most players are with the medium player having rank Gold and only 7% having the lowest rank, Iron.
Meanwhile BL ranks in skirmish seem exponentially distributed all the way. The medium player is Bronze 3, nearly Bronze 2 and roughly 1/3 of ranked players have the lowest rank, Bronze 1.
I think that is a grave shortcoming on Bannerlords part as my intuition woud be that the medium player should be Silver 2, reached by barely 1/3 of players. Giving 2/3 players the feeling that they are substandard and giving 1/3 of the players the feeling that they are the very bottom doesn't seem like a good method to motivate average Joe to play ranked.

I'm interested in your insights and especially in how the updated system in v1.2.12 is going to work
 
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