Arena

You can participate in the arena in Mukurogai any time after arriving there in Chapter 2.

Talk to the guy at reception and he'll register you for the arena. Talk to him again to bring up the arena menu.

The top option fights in the arena
The 2nd option is the gift exchange (you can exchange the "Fighting Orbs" you gain in the arena here for items)
The 3rd option shows you a screen of the arena opponents (including your win/loss record against them and the items you can get from them)
The 4th option shows you the rules
The 5th option exits out of the screen

When you select to fight in the arena, you get 2 options: You can either fight in a knockout tournament (like the tournaments in previous games in the series) or you can fight in the "100 Man Killing" mode (where you continuously fight enemies until you either lose all your health or beat 100 guys). In this mode, the number of enemies you defeat determines your reward:

Number of Enemies Defeated Prize Money Fighting Orbs
25-49 5000 Mon 500
50-74 1 Ryo 1000
75-99 3 Ryo 1500
100 5 Ryo 2000

 

You sometimes get 1 of 2 items when you defeat an enemy in the knockout tournament (see tables below).

Below are the tournaments you can fight in (in the order they appear on the list in-game) and the enemies in those tournaments:

Tournament

#1 - Baptism Period
Prize Money: 300 Mon
Fighting Orbs: 50

Opponent Weapon Possible Item Drop #1 Possible Item Drop #2
Shortsword Black Metal Powder Light Brown Metal Powder
Spear Black Metal Powder Turquoise Metal Powder
Club White Metal Powder Light Brown Metal Powder
Sword Black Metal Powder Turquoise Metal Powder
Spear White Metal Powder Grey Metal Powder

#2 - Trial Period
Prize Money: 300 Mon
Fighting Orbs: 50

Opponent Weapon Possible Item Drop #1 Possible Item Drop #2
Sword Tamahagane Steel Board
Sword Silver Fragment Steel Board
Unarmed Decrepit Gear Brand-New Screw
Club Exquisite Gear Brand-New Screw
Spear Rusty Spring Decrepit Gear

#3 - "My style" Weapon War

Prize Money: 1000 Mon
Fighting Orbs: 200

Opponent Weapon Possible Item Drop #1 Possible Item Drop #2
Hoe Driftwood Piece Deadwood Branch
Jitte Robust Wood Good Quality Piece of Wood
Big Hammer Driftwood Piece Good Quality Piece of Wood
Spear Driftwood Piece Soft Wood
Club Robust Wood Deadwood Branch

#4 - Unarmed Group War

Prize Money: 2500 Mon
Fighting Orbs: 100

Opponent Weapon Possible Item Drop #1 Possible Item Drop #2
Unarmed White Metal Powder Grey Metal Powder
Unarmed Dark Brown Metal Powder Grey Metal Powder
Unarmed White Metal Powder Black Metal Powder
Unarmed Dark Brown Metal Powder Black Metal Powder
Unarmed Dark Brown Metal Powder White Metal Powder

#5 - Crazy Sword Spree

Prize Money: 2000 Mon
Fighting Orbs: 200

Opponent Weapon Possible Item Drop #1 Possible Item Drop #2
Greatsword Silver Hammer Large Gold Nugget
Sword Platinum Grain Large Gold Nugget
Sword Platinum Grain Small Gold Nugget
Sword Silver Hammer Small Gold Nugget
Greatsword Silver Hammer Platinum Grain

#6 - Shooting Spree

Prize Money: 2000 Mon
Fighting Orbs: 200

Opponent Weapon Possible Item Drop #1 Possible Item Drop #2
Gun Handmade Device Exquisite Gear
Gun Handmade Device Rusty Spring
Gun Small Clockwork Exquisite Gear
Gun Small Clockwork Rusty Spring
Gun Broken Compass Small Clockwork

#7 - Warrior's Banquet

Prize Money: 5000 Mon
Fighting Orbs: 300

Opponent Weapon Possible Item Drop #1 Possible Item Drop #2
Sword Golden Hammer Silver Hammer
Shortsword Beautiful Silk Vermilion Cloth
Sword Sacred Tree Wood 1000 Year Old Tree Branch
Sword Platinum Lump Platinum Grain
Unarmed Silver Metal Powder Dark Brown Metal Powder

 

Fighting Orb Exchange

Picture Item Cost
Vitality Pill 200
Copper Hammer 500
Silver Hammer 1000
Grey Metal Powder 500
Black Metal Powder 750
White Metal Powder 1000
Dark Brown Metal Powder 1500
Silver Metal Powder 2000
Good Quality Piece of Wood 500
Soft Wood 1000
Robust Wood 2000
Pearl 3500
Driftwood Piece 4500
Wooden Bear Carving 5000
Indigo Stone 8000
Folding Fan 10000
Gold Plate 30000
Eyepatch with a Snake Design 35000
God Slaying Talisman 45000
Sobering Hood 50000
Ebisu Headgear 150000
Gold Sword 300000