I'd say it's closest to 3. It's free, but there will be ads and IAP. You can buy different coin amounts or a coin doubler. Any IAP will remove the ads.
The game is based around belts, white through black, 9 in total. Each of the first seven belts ads a new ninja type. The higher the belt the more time you have to fight, therefore more time to get a high score. You can unlock belts with coins, but you'll have 3 achievements you must complete to actually earn the belt. I wanted everyone to play all the types so I kept the coins required for those first belts low. I think of them more as tutorial belts. The coins required to unlock the later belts goes up, but by that time you should know if you like the game. You'll have to grind a little, but I tried to keep it sane.
Ok, cool. I'm ok with anything but 4 and 5 basically. Sounds like a cool concept, and I like that you didn't just go "oh hey, let's make this game plus one or two new mechanics," but you actually made YOUR OWN game. And it looks sweet!