AMA with Phuture Protocol, seeking for passive index strategies under Web 3 network

At 18:00 on May 27th, 7 O’Clock Community welcomed its 97th guest, Charles Storry, Head of Growth@Phuture & Oliver Mehr, Head of Product@Phuture

7 O’Clock Community is one of the largest DeFi Communities in the world. It is initiated originally by 7 O’Clock Capital founding members, blockchain industry experts and enthusiasts to share knowledge of DeFi, and accelerate the implementation of blockchain technology in the real world. The community now enjoys 1,000+ subgroups, and covers 20k + active members, with the spread and report of 150 blockchain industry media.

Q1:What is Phuture?

Oliver Mehr:

Phuture is a decentralised protocol built for the creation and investment of passive investment strategies ,We aim to become the de facto platform for indexing across all chains.

Charles storry:

The Phuture protocol introduces its unique, scalable, aggregated index architecture that allows it to rebalance across multiple indices simultaneously. Its smart rebalancing engine dynamically ascertains the optimal rebalancing triggers, minimising value lost through swaps and improving index performance.

Q2:Can you speak a little more about trying to make the Phuture protocol as user friendly as possible?

Oliver Mehr:

Phuture has been designed with the user in mind. The Phuture protocol 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.

We introduced The Index Creator to support an array of index options including automated sector tracking and dynamic weighting methodologies. This is in place to make the indices created and invested into an automated passive product.

Our target market at launch is crypto natives, hence why we are doing an IDO on Polkastarter. It’s not to raise capital but a growth strategy to help promote Phuture and its ecosystem.

We see a huge opportunity for Phuture to expand outside of the crypto community, to the wider population. The platform has been designed in an intuitive and simplistic way to allow non-crypto natives to engage in the protocol!

Q3:Will the $PHTR token be launched with governance?

Oliver Mehr:

We intend to launch with governance live. This means that once our platform goes live fully in July, users can create and vote on proposals. In order to vote, PHTR must be staked. Users who stake receive ePHTR or ‘enhanced PHTR’. This provides voting rights and users receive a yield for staking. This yield will come from the treasury in the beginning but as more fees are generated on the platform these fees will be sent to the staking contract. In order to redeem a Phuture Index you must burn 1% of the index value in PHTR. This is a tax on arb traders. Why? Because most users will not redeem indices, they will just sell them on uniswap. But arb traders will buy from uniswap for less than NAV and redeem on Phuture platform for NAV. Therefore, this 1% burn redistributes some of the arb traders profits to the PHTR token holders.

PHTR token holders benefit from three fees.

AUM fee

Yield fee

Redemption fee

All fees go back to treasury, controlled by token holders.

Q4:What is your advantage over other index projects like index coop?

Oliver Mehr:

Phuture has designed its platform in a unqiue way to our competitors. I define these comps as Index Coop, Powerpool, PieDAO and Indexed. The latter three are all based on balancer smart pools. One thing that those projects have realised is balancer smart pools are in flexible due to being an AMM.

Here are some examples: When you create new balancer smart pool it doesnt have any liquidity, so users cant do one sided deposits because slippage is too high. Therefore, users must bring every asset in the index in order to mint. This is a poor user experience, most people dont own all the assets of an index, that is the reason they are buying. Phuture solves this by tapping into external liquidity, this means that regardless of the size of your index, your execution costs will be roughly the same. Whereas on balancer the depth of the pool heavily dictates how much price impact you experience. This might be fine if you only have a few indices which are all quite deep but on Phuture we are letting anyone create indices which means we will have indices that are not that popular. Regardless, if someone wants to invest in a less popular index it should be the same experience.

When we look at index coop we saw that their auction mechanism required a lot of coordination and that is one factor why they rebalance only monthly or quarterly.

However in crypto, not rebalancing for a whole quarter can mean your index is wildly out of weight. Phuture utilises external exchanges to allow it to rebalance more dynamically, when assets become out of balance. This ensures that our indices are true to their original thesis, more of the time.

Furthermore, let’s assume each index costs X to rebalance. If index coop have 5 indices it costs them 5x to rebalance.

On Phuture whenever we rebalance we rebalance multiple indices at once. Therefore, the cost of rebalance is spread over a number of indices, reducing the individual cost per index.

Moreover, our system is more robust during network congestion as auction can lead to a lot of.Value lost from the index investor if the auction bids cannot be included in the next block.

We are the only platform to allow for do.

Completely permissionless index creation with indices that auto reweight and track top rankings within a sector.

When index coop execute an auction to rebalance, the index investors are paying for this cost. This is on top of the fee they charge as well. If the index is only small then the cost to rebalance can be much greater than the fee paid. For example, an index with 10k USD might have to pay 1kUSD for rebalancing transactions. This means the index investors just lost 10% of assets.

On Phuture we pay for the cost of rebalancing until the fees received by the index are sufficient to cover the costs. This means index investors only ever pay the fee and nothing more.

Indexcoop since their indices are quite large, because they only have a few. But on Phuture anyone can create indices, this means that we will certainly have a lot of smaller indices on the platform.

We want the experience of investing in a smaller index to be exactly the same as a large index.

Firstly, we will be audited by Quantstamp, one of the best audit firms in the industry before we go live on Mainnet .Our token launch is 3rd of June on polkastarter .We will launch with staking.

PHTR can be staked into the protocol. When PHTR is staked the user receives enhanced PHTR (ePHTR). ePHTR gives the holder access to governance capabilities. In addition, ePHTR is continuously earning and compounding PHTR denominated rewards. An ePHTR holder can redeem their accrued rewards by unstaking.

Initially, rewards distributed to the staking contract will stem from the treasury but over time they will be replaced/augmented by the fees generated on the platform. Fees generated on Phuture are used to buy back PHTR on the open market and redistributed into new and/or existing operating/growth/retention initiatives.

Staking naturally dilutes non-participatory token holders relative to staked holders over time. This results in more influence being held by the active and engaged portion of the Phuture community.

Free Q&A Section:

  1. What is passive investment?

Oliver Mehr:

Passive investment is where the investors takes no active management over his capital. Their funds are automatically rebalanced and Reweighted for them.

Therefore, an investor can buy a index that tracks the top 3 tokens in the exchange sector. They can be sure that this index will always track those top 3 tokens for the lifetime of the index, without the investor doing anything.

2. For Chinese users, do you have airdrop plans or whitelist?

Oliver Mehr:

We have a whitelist open now. To join in our IDO on Pollastarter. In terms of airdrops we are in discussion with to make a push the Chinese community.

3. Will there be other products types? Something High risk high return?

Oliver Mehr:

We strive to make sure our products are safe for users. That is why we define a whitelist of accepted assets. These assets have been battle tested and are from credible projects. We will be building leveraged indices in the future but these will not have liquidation risk for the user. I can say in general we do not offer high risk products, although of course there is always a risk. People who have 250 POLS can participate in IDO.

4. How can individual investor participate?

Oliver Mehr:

Instructions are here.


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