Place the coconut milk, quartered onion, smashed garlic, 1-inch piece of ginger, lemongrass paste, Thai red curry paste, fish sauce, and a pinch of salt and black pepper in a blender and blend until smooth.
Pour the blended coconut sauce into the Instant Pot. Add the chicken breasts, chopped red bell pepper, chopped Fresno pepper (or jalapeño), and the cinnamon stick.
Seal the Instant Pot and cook on High Pressure/manual for 8 minutes.
When the cook time is complete, use either a natural release or quick release according to your preference, then open the lid.
Switch the Instant Pot to Sauté and bring the liquid to a boil; simmer for about 5 minutes until the sauce reduces slightly. Remove and discard the cinnamon stick.
Shred the chicken in the pot using two forks, stirring to coat it in the sauce.
Stir in the chopped cilantro, torn basil, and lime juice. Taste and season with additional salt if needed.
Serve the shredded chicken over steamed rice and top with peanuts, shredded carrots, and sliced green onions.
