i have a 3 months old iphone 7 the battery wear level is 3% is it normal or degrading fast will my battery be replaced under warranty?

The warranty would cover the battery if it is less than 80% within the warranty period. Also, it would have to be tested under Apple's diagnostics to determine the degradation percentage. Based on your current rate of wear your battery would still be well above 80% at the end of one year.

Nothing wrong with that battery

Your battery is just fine and would not qualify for warranty replacement.