I feel like ten is definitely too many tiers, but three isn't enough for the level of specificity you need to be fair in a ranked system. If you're being largely lax about the ranked system then it's not so bad, but I don't think it can adequately match characters for the purposes of "equal" power levels as it is.

For just-for-fun fights, sure, the loose definitions provided by the three-tier system are fine. In ranked? Less so.

I am fairly certain that I could make a character on the highest fringe of the second tier and beat 90% of people with it (purely from a power perspective, disregarding individual combat skill) and I feel like that could be exploited?