Crypto Index platform Phuture plans to disrupt the indices market with simple engineering, automatic balancing and inbuilt yield optimisation. If all of that sounds complicated, the truth is that the underlying idea is really very simple, and it could be that this is one of the most important crypto projects which could gain mass-market appeal in the not too distant Phuture (do you like what we did there?)
What on earth are indices and why are they important?
In the traditional investing world, indices are an extremely popular way for investors to participate in the stock market in a more passive way, without the need for them to spend oodles of time researching different company fundamentals and technicals.
Instead of buying shares in, and having to keep track of multiple companies, an investor simply buys stock in one of the indices, and the value of the index is linked to the combined value of the companies within the index, meaning that investors effectively are spreading risk around whilst having simple access to them all.
The most well known indices include the S&P 500, which is a market-cap-weighted index of the 500 largest publicly traded corporations in the United States, essentially the top 500 companies. The FTSE100 is another index, which encompasses the top 100 companies traded on the London stock exchange in the United Kingdom, and there are many more.
Create, Invest and manage Crypto Indices Passively.
Phuture allows users to invest in crypto indices, which essentially are “baskets” of digital assets grouped together, in exactly the same manner as the traditional indices like the S&P 500 or the FTSE. But where Phuture differs from the traditional is that it also allows users to create their own crypto index, comprising of their own bespoke “basket” of different tokens, and make this index accessible to any and all investors who wish to participate.
So, if you are a Phuture user, and you would like to create your very own index of DeFi protocols, you can do it, in as little as a few mouse clicks. Do you want to make a crypto index based on NFT’s, or low-cap undiscovered coins, perhaps even Meme-stocks, or maybe just tokens which start with a particular letter of the alphabet? Yep, you can do that too.
Basically, the whole ethos of the platform is to make it possible for anyone with an interest to both create and invest in crypto indices that they like.
Liquidity issues for new crypto indices
One of the things that tends to Kibosh many crypto projects is lack of liquidity, meaning the amount of available cash or crypto tokens in the market is too small to be able to be easily converted from one to the other. In the past, new companies often needed to find a liquidity provider to be able to trade their shares (or tokens) efficiently, and this often meant putting up large amounts of capital right from the beginning, which often created an issue for smaller projects.
Phuture solves this problem through effectively creating ‘liquidity pools’ from external sources. The long-and-short of it is that creating a index can now be achieved with a much smaller level of initial liquidity, and new indices which are being minted on the Phuture platform can accept one-token deposits with as little as 1000 USDC in market cap, and the system searches through exchange reserves for the best transaction and execution prices.
Automatic price balancing and weighting
In the crypto world, because of the sheer number of different digital assets, all of which are continuously being traded around the clock, prices between different pairs requires balancing to ensure a stable price discovery. This challenge would be impossible by human beings, but thanks to the nature of the internet and multiple price oracles providing instant data, all indices on the Phuture platform are serviced by ‘dynamic band rebalancing’… in other words, the system automatically works out the price and weightings of the different tokens which comprise the index.
Strong Partnerships with Market Leaders
Phuture has already developed some impressive partnerships with leaders in the evolving crypto space, including The Graph, Mirror Protocol, UniSwap, Chainlink and Keep3r to name but a few. Strong relationships like these, which the young team have been able to negotiate and integrate already, tend to be indicators of a company which has fundamentally understood the nature of operating and competing in the contemporary marketplace.
Inbuilt Yield Optimisation
One of the major differences between the traditional, and what could be possible in the crypto indices market is the fact that many cryptocurrencies can benefit from deriving additional revenue by Yield Farming.
Yield farming is the practice of staking, or lending, crypto assets in order to generate high returns or rewards in the form of additional cryptocurrency, essentially meaning that the cryptocurrencies held in each “basket” could be staked, and therefore increase their fundamental value by generation an Annual Earnings Rate.
Phuture Fundamentals: Building a Seemless Interface on a Modest Seed Round
Many projects are keen to release working MVP’s (Minimum Viable Products) as quickly as possible, but “going ugly early” to create an interested user base and community early isn’t always the best idea, and it’s in this that the Phuture team should be commended for their commercial foresight.
Back in 2020, the Phuture team decided to hit the brakes on launching their platform at the time, mainly because they wanted to ensure that the user experience was unbelievably simple and easy, and this should be music to the ears for anyone who has been in the crypto space for some time and seen just about every kind of poor quality, low-grade, and often very hard to navigate UI/UX imaginable.
Holding back on an early launch also allowed the team, which to date had been self-funded (again, another big green tick in the box for the company) to raise seed capital to take the project forward. Early investors who saw the potential of crypto indices provided a modest $1.5M USD to take Phuture to the next level. This is a far cry from the ICO madness of the pre-2018 era which saw vast sums being ploughed into projects which had little to show for it, and many of which inevitably went to nought.
The most important project of 2021?
Ideas which have the potential to be disruptive are often understated, and really take their time at the front end, ensuring a perfect combination of strong engineering, fiscal conservatism, and down-to-earth real problem solving, which often tends to mean doing something different to those which launch early with a fanfare of empty promises.
When you look simply at the company, this small team has really spent the time thinking about, and actually focussing on the real issues in the current cryptocurrency market, not least the need to create products and services which newer and greener users can really understand and get behind. There is a reason that indices make up a huge amount of the traditional investing market, and this is because smaller, often retail investors, are concerned less with sitting in front of their computers screening different stocks, and more interested in passive, long-term strategies which grow portfolio’s without the wild volatility and risk of trying to catch peaks and troughs.
The very fact that this project has understood these fundamentals suggests a very bright Phuture, and a potential for this new kid on the block to bring crypto four-square into the portfolio’s of many new investors who don’t currently have a position in cryptocurrency.
Find out more about Phuture by visiting their website.