About Phuture Finance

3 min readSep 26, 2021

What is Phuture?

Phuture is a decentralized 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 in existing ones created by the community.

Phuture Finance Protocols

Liquidity Nexus
Index Architecture
Smart Rebalancing
Flexible Index Design
Asset Optimisation
Solvers

Liquidity Nexus

Phuture aggregates liquidity from across the Ethereum network using the 0x API to provide access to best execution and a wide array of assets. Whilst some aggregators optimize for the best-quoted price, hoping that the better rate will attract more order flow. The 0x API maximizes for the best fee-adjusted price, and as a result, provides better execution than other aggregators 72% of the time.

Smart Rebalancing

Phuture has introduced rebalancing bands which prevent the rebalancing system from operating when an asset’s weight sits outside of an acceptable range. This functionality stops excessive rebalancing triggered by small movements in the underlying price and also provides safety to the system when prices move by a great magnitude.

Flexible Index Design

The Phuture Index Creator provides a diverse range of choices, including different weighting methodologies, tracking functionality, and curated sector choices.

Asset Optimisation

Phuture facilitates off-platform yield optimization enabling productivity of idle assets and improved index performance.

Phuture’s reserve model keeps enough assets within the platform to support redemptions and rebalances, whilst the remainder is put to work on yield optimizers. The reserve parameter is configurable through governance and dictates the percentage of each asset held on Phuture.

Solvers

Phuture uses solvers to ensure the proper operation of the platform. Solvers execute three core protocol functions:

Rebalancing
Recapitalization
Re-weighting

Rebalancing: Solvers interact with Phuture’s smart rebalancing logic to retrieve data on which assets are out of balance and the desired trade quantities. This information is parsed into the 0x order router for execution. Solvers with the requisite bonded stake are whitelisted to interact with Phuture’s rebalancing router to ensure proper execution.

Recapitalization: Solvers monitor the health of asset reserves and move assets between off-platform destinations and Phuture’s smart contracts. When reserves exceed the target, solvers move assets from Phuture to off-platform destinations. When reserves fail to meet the target, solvers move assets from off-platform destinations to Phuture.

Re-weighting: On a periodic basis solvers will refresh dynamic data stored in a reference contract. An example of a dynamic dataset is market cap data. This data is used to mint indices that are based on dynamic datasets. In addition, validators will reallocate index shares within the protocol’s vault to ensure indices built on dynamic datasets have the correct claim on the protocol’s assets.

Governance

Phuture operates as a decentralized autonomous organization (DAO). This means that we believe in making decisions as a collective. Each community member has the ability to participate in ongoing discussions, propose new ideas and vote on existing proposals.