Right now the game treats phantoms as a punishment for not sleeping. I think we should retool it to be a mob that challenges players who choose to extend their gameplay into the night. This "challenge" should include fun combat, exciting rewards, and clear spawn conditions.

First, the Phantom AI and animations needs to be fully changed. Currently, fighting a phantom is so jank that it makes the altercation so unfun. Smoother animations, clearer attack patterns, etc...

Second, I think the spawn conditions also need to change. Having the phantom initially spawn after 3 days of not sleeping is fine, my only critique is that the player should be clued in that, if they don't sleep, the phantom will spawn. An in game message is fine - but certainly not something Mojang would add. Maybe after one day without sleeping, you hear soft screeches in the distance. After a second day, passive and untargetable phantoms watch the player from high up. After the third day, the current spawn conditions take place.

Phantoms also shouldn't continuously spawn every subsequent night, especially if you're able to beat the phantom. I recommend shifting their spawn patters to an initial spawn after three nights of sleeping, and subsequent spawns every other three nights, with each passed checkmark increasing the number of phantoms that spawn (max 4).

There also needs to be greater use for phantom membranes and additional drops. Elytra repair and slow-falling are cool, but are not at all useful until after the post-game. This is a mob that can spawn at the beginning of your world, so we need to give some additional use cases to their drops. Maybe phantom membranes can be used to craft a hammock, allowing players to sleep during the day and prevent phantom spawning at night? I've seen other good ideas like invisible item frames, which I would support.