Maybe the reason Phanes isn't intervening despite everything going on is that he can't
Basically, Honkai Impact has given us two examples of gods who determine the "laws" of a world (namely, Sa/Vita and Senadina) losing the ability to interact with said world directly. Sa is shown using "representatives" to interact with worlds under her control and Senadina shows that this phenomenon doesn't necessarily happen immediately.
Since Genshin is confirmed a part of the Honkaiverse, this phenomenon could explain why Phanes isn't directly intervening in Teyvat. When he first took control, he still could interact with the world - able to enact divine judgement and be fought as a result - but that time has long passed. Now he has to rely on his "representatives", the Shades, to enact his will in Teyvat.
Since Genshin is confirmed a part of the Honkaiverse, this phenomenon could explain why Phanes isn't directly intervening in Teyvat. When he first took control, he still could interact with the world - able to enact divine judgement and be fought as a result - but that time has long passed. Now he has to rely on his "representatives", the Shades, to enact his will in Teyvat.
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b. It's not a matter of losing power, but a broader rule of the universe
So until shown otherwise, I'm content to assume that Phanes is actually "sleeping", for a given value of what that means for a divine being.
Phanes started their slumber 500 years ago after intervening to stop the surge of Abyssal power emerging from the Kingdom of Khaenri'ah, which in their timeline is literally nothing. Venti slept double that long