"I have to discuss them with my people first, Sir. I can't really make the decision myself even though I want to dissolve the kingdom to join with my friends," Frost leaned to the third option.
He did not intend to create the kingdom at first. When the Game started, Tang Shaoyang, Kairu, and Wen left. He gathered the people from the fourth tribe and also the humans from the nearby villages.
Frost and Jacky gathered them to protect them while their friends were away. If they were left be. It was just a matter of time before God's followers killed them all as they were still in a conflict against The Goddess of Harmony. That was his thought process, he gathered them and protected them until someone proposed to establish the kingdom.