This is the next quest in Chapter 4 - following the series of quests where you obtain your first Kuku Pot - starting immediately after the quest "The Pot's Use".
Business at the Kilnden Workshop has been put to bed. Return to Howling Hill and get some rest.

1. Return to Howling Hill
Return to the camp and speak with Andrew, who is standing next to the main tent. After a moment, Duane will join you, informing you of Yann's troubles and that there is no time to lose.

2. Ride a horse and follow Duane
Summon and mount your horse, then follow Duane. Along the way, he will explain exactly what happened. Eventually, you will reach the Goldenfist Arena.

The soldiers there will have a proposal for you on how to resolve the problem.

3. Win three times at the arena
To take part in the fight, you must be unarmed. To do this, open the weapon wheel and switch to "Ordinary Gloves."

To start the duel, speak with the host. Each fight will cost you 30 copper.

Information regarding the tournament rules will also be displayed. You are only allowed to use unarmed attacks or else you get disqualified.

You must defeat three opponents in a row. If you lose a fight, you have to start over from the beginning.

4. Return to Howling Hill with Yann
After winning three fights in a row, simply return to the soldiers and they will release your friend.

Mount your horse, wait for Yann to climb on with you, and return to your camp. Once you reach your destination and dismount, Yann will tell you about an archery tournament, after which this quest will come to an end.

Duane led the way to the fighting pits where Yann was being held. Though a bloody fight was waged to buy his freedom, Yann acted like it was a minor inconvenience, even leveraging his aches and pains to evade a prior commitment to Naira.