The model above assumes that the amm is oracle-based, so you’re right that the funding under OB method will return 0. We are exploring methods for defining mark price and planning to release another write-up on that!
I agree - funding rate wouldn’t magically address all the problems. I believe the better approach is to clarify the objective of the AMM and try to price it, which is definitely not easy if we want to consider how traders respond to such pricing (which was the motivation for Bandit Funding Rates)