How to make custom characters unlockable?

I understand it's with challenges, but the challenge and character editor menus both say nothing about it. Am I missing something?

Once you've created a challenge (doesn't even need to have been completed yet), you'll see 'Advanced options...' next to the 'Create Another challenge' button. Click that, then 'Challenge Rewards'.

But only unpublished characters can be challenge rewards.

Just checked, and the challenge requires a validation from the moderation team, just to put in a character.