Perpetual Protocol V3’s funding rate algorithm, designed to align perpetual futures prices with spot prices, may falter during market calm. Unlike traditional futures, perpetuals rely on funding rates to balance long and short positions, calculated via market demand and price differentials. In low-volatility periods, the algorithm struggles to adjust rates effectively, leading to persistent price discrepancies. This can incentivize arbitrage but risks inefficiencies for traders. Perp V3’s shift to a Uniswap V3-based model aims to enhance liquidity, yet calm markets expose limitations in dynamic rate adjustments. Could this reveal a flaw in the vAMM design, or is it a trade-off for decentralized leverage? Exploring these dynamics is key to understanding Perp V3’s performance.