This problem can be solved by decoding with Real fence cipher (available at https://cryptii.com/). Trying the key parameters until we get exact 4 characters (length of 'flag' string) outside of '{' and '}' in the output, which gives key = 4. Then brute force the offset from 0 to 4 until we see output starting with 'flag' string, which gives offset = 2. The final output is flag{and-yet-swears-he-observes-the-phantasms}.