We introduce an Interaction and Trade-off based Eco-Evolutionary Model (ITEEM), in which species are competing for resources in a well-mixed system, and their evolution in interaction trait space is subject to a life-history trade-off between replication rate and competitive ability.We demonstrate that the strength of the trade-off has a fundamental impact on eco-evolutionary dynamics, as it imposes four phases of diversity, including a sharp phase transition. Despite its minimalism, ITEEM produces without further ad hoc features a remarkable range of observed patterns of eco-evolutionary dynamics. Most notably we find self-organization towards structured communities with high and sustainable diversity, in which competing species form interaction cycles similar to rock-paper-scissors games.