What is Phuture?

Phuture is a decentralised protocol focused on building and investing in token-based passive investment strategies within a Web3 environment.

It also follows an open design approach to help people create passive strategies, offering the ability to launch new indices or join indices already made by the community.

The platform is built around the user, combining an intuitive UI with a toolkit that adds both power and depth. With the Index Creator Tool, users can easily set up indices. The Index Creator supports multiple index styles, such as automated sector tracking and dynamic weighting methods.

The Role of a Phuture Index

How Phuture helps index products expand.

Index investing is central to traditional asset management, and leading index providers have accumulated trillion-dollar AUMs. It’s estimated that around 50% of the value in the U.S. stock market is held in index funds.

As crypto markets keep evolving, it’s likely that allocation of assets and strategies will start to resemble traditional finance. Phuture’s index platform could benefit from this shift, and its user-friendly design is meant to serve both crypto participants and newcomers to decentralised finance.

As the token economy grows and becomes more varied, users will look for products that provide diversified exposure across different sectors. Sector-focused indices can act as key benchmarks for performance. With Phuture’s index creation tools, the index lineup can grow alongside the market-adding support for new sectors as they emerge.

Token economies differ from traditional ones because token holders play a more direct part in decision-making. Following this principle, Phuture will enable active governance participation for the tokens it custodies. It will also reduce opportunity cost by using off-platform yield optimisers.

Index Architecture

Optimised Rebalancing

Phuture’s open design calls for an architecture that can handle any number of indices created on top of it. Rebalancing each index individually wouldn’t be practical, since it would scale as O(n*m)O(n∗m) in computational complexity. In other words, for every index created, n*mn∗m extra actions would be needed to bring the system back to a balanced state. Over time, the number of transactions needed to achieve balance would become too large.To address this, we redesigned the index architecture. At the top level, all indices are grouped into uniform pools of assets, and each pool is assigned a weight based on how heavily each asset features across the indices. The platform can now rebalance between asset pools globally rather than rebalancing assets within each individual index. This cuts computational complexity down to O(m)O(m) when indices that include new assets are created, and O(1)O(1) when indices with existing assets are created. A new asset is defined as one that the Phuture protocol does not currently hold.When a rebalancing happens between two asset pools, it impacts every index that includes either of those assets-moving the protocol toward overall balance.

Optimised Asset Productivity

Beyond improving rebalancing efficiency, the aggregated approach enhances asset productivity. To move assets off platform for additional yield, Phuture must keep a reserve level available for rebalancing and redemptions. If reserves were managed separately for each index, the number of transactions would rise as more indices are created. It would also limit yield optimisation for smaller indices, since their assets would need to stay reserved for redemptions and rebalancing.Instead, Phuture keeps a single reserve for each asset pool across the platform. This changes how transaction demand for asset optimisation relates to new indices. More importantly, it means indices can benefit from additional yield regardless of size, because yield is distributed pro rata among the indices contained within an asset pool.