What is Phuture?

Phuture is a decentralised protocol built for the creation and investment of token based passive investment strategies in a Web3 environment.

Phuture introduces an open design philosophy for creating passive investment strategies, providing the tools for users to create new indices or invest into existing ones created by the community.

The platform has been designed with the user in mind. It conflates an intuitive UI with a set of tools that bring power and depth to the experience. Phuture makes it easy to create indices through the Index Creator Tool. The Index Creator can support an array of index options including automated sector tracking and dynamic weighting methodologies.

The Role of a Phuture Index

How Phuture supports the growth of index products.

Index investing is a cornerstone of traditional asset management and the top index providers have accumulated trillion-dollar AUMs. It is estimated that nearly 50% of the value in the U.S. stock market is held by index funds.

With crypto markets developing it is highly probable that asset and strategy allocation will begin to converge with traditional finance. Phuture’s index platform stands to benefit from this influx of capital and its user friendly design will appease both crypto natives as well as users completely new to decentralised finance.

As the token economy expands and becomes more diverse, participants will want products that can provide them with diversified exposure to these different sectors. Sector specific indices will become the schelling point for benchmarking performance. Phuture's index creation tools allows its portfolio of indices to grow with the market, easily supporting new sectors as they are defined.

However, token economies are unlike their traditional counterparts in the sense that token holders take a more active role in the decision making process. In line with this ideology, Phuture will support active participation in the governance of the tokens it custodies. Additionally, Phuture will minimise opportunity cost by leveraging off-platform yield optimisers.

Index Architecture

Optimised Rebalancing

Phuture's open design requires an architecture that can support any number of indices created upon it. Rebalancing each individual index was not a viable option as it would lead to O(n*m)O(n∗m) computational complexity. Meaning that for each index created n*mn∗m additional operations are required to return to a balance state. The number of transactions required to bring the system to balance would eventually become unmanageable. To solve this problem, we reengineered our index architecture. At the highest level all indices are grouped into homogenous pools of assets and assigned a weight based on the asset's weight in each index. The platform can now rebalance between assets pools on a global level as opposed to rebalancing between assets on a local index level. This immediately reduces computational complexity to just O(m)O(m)when indices with new assets are created, and O(1)O(1)when indices with existing assets are created. A new asset is defined as one that is not currently held on the Phuture protocol. When a rebalancing transaction occurs between two asset pools it affects every index that holds either of those assets. Ultimately, moving the protocol towards a state of balance.

Optimised Asset Productivity

In addition to offering superior rebalancing efficiency, our aggregated design improves asset productivity. In order to push assets off platform to generate additional yield, a reserve level must be maintained on Phuture to support rebalancing and redemptions. Maintaining reserves on a per index basis would require an increasing number of transactions as more indices are created. In addition, smaller indices would not benefit from yield optimisation because their assets would need to be reserved for redemptions and rebalancing.Instead, Phuture maintains one reserve for each asset pool on the platform. This dislocates the number of transactions required to facilitate asset optimisation from the number of new indices. More importantly, it ensures that regardless of the size of an index it can benefit from additional yield. This is due to the fact that yield is shared pro rata across the indices that make up an asset pool.