how do i upgrade my champs to 2 or 3 star

You need to have 3 of the same kind and same level. It upgrades automatically.

For example, if you have x2 Level 1 Graves and buy the 3rd, those three will combine into x1 Level 2 Graves. In essence, to have a Level 2 unit you need to buy x3 Level 1; to have a Level 3 you need to buy x9 Level 1.