Originally Posted by Kaz_LOTB
With some of the new tuning updates and modes (especially daily challenges), you will have more opportunities to earn rare characters. In terms of the drop rates themselves, the repeats at each tier are mainly a result of the amount of content in the game, which we are currently in the process of expanding. We also have a feature in the works called "Sacrifice", which will allow you to make use of duplicate characters to earn rare rewards, including Legendary Souls, giving you even more opportunities to obtain high tier characters.
-Kaz
The current plan is that higher star and level characters will gain you more from Sacrifice than lower star and level characters. So both the Star Tier AND Level will matter.
-Kaz