The PvP challenge concept in its current form seems imbalanced. A player with no inventory (or an inventory of only items with detrimental passive effects) could simply challenge others with impunity with no repercussions, whether or not their challenge is accepted, or whether they win or lose the challenge. There needs to be some risk to go along with issuing a challenge.

I would suggest this set up: if the challenger/attacker loses their challenge, they also lose a life point. The challenged/defender keeps their life total regardless of the result. In addition, the defender may choose to "reply to the challenge" by declaring an item in the attacker's inventory that they want to play for before rolling -- in this case, then both the attacker's and defender's specified items are staked.

The intent of the rules that I've proposed is to prevent challenge spam, and to also make prospective attackers think twice before issuing a challenge -- they're going to want to be sure that the item they seek is so good that it's worth the risk of losing a life point and an item. It also provides an incentive for a defender to accept the challenge under certain circumstances (e.g. both attacker and defender believe that the other has an item that is so much better than what they have now).