The money from War Paint sales goes back to the community. So people who make the content (skins etc) get a percentage of sales and then the rest goes into the organisation i.e paying for a studio to cast from and prizes for the participants.
The default milestones are created from these original sales and that's why the tournament has been announced.
I know how it works.
20% from the Warpaint sales is supposed to be put towards competition prize pools.
$850 prize pool would mean they had only sold $4250 of Warpaint skins which is obviously not true. So I'm just wondering if the other sales were used to recover what they spent on ESL. I think it even mentions that in the polycount competition.