A CSGO skin upgrade works by allowing players to increase the value of their in-game items or 'skins'. Players choose a skin from their inventory and 'bet' it on the chance of upgrading to a higher-valued skin. The success of the upgrade depends on the chosen upgrade percentage, which determines the risk of the bet. A lower upgrade percentage means higher risk but potentially greater rewards, while a higher percentage implies a lower risk with smaller rewards. If the upgrade is successful, the player receives a higher-valued skin; if not, they lose their initial skin.