Contemporary distributed virtual environments are growing out of terabytes of 3D content and hundreds of thousands of users. Server-client architectures have become inadequate for fulfilling the scalability requirements. The peer-to-peer architectures provide inherently scalable, cost-effective distributed solutions for distributed virtual environments. We present a fully distributed peer-to-peer framework, Phaneros, which is capable of providing necessary means to realize more efficient and more scalable massive distributed virtual environments. Using the presented visibility aware interest management, Phaneros performs better than existing overlays, achieving single hop update dissemination while having lower bandwidth requirements. The provided visibility aware 3D streaming scheme distributes 3D content more efficiently without creating any significant load on the server. Our test results show significant improvements over existing frameworks.