Instances fill up with people until they are forced to close registrations....
Instances fill up with people until they are forced to close registrations. Registrations can only re-open when they voluntarily give more money to the admin. (If an admin found themselves with $10k a month in donations, they buy more hardware/support more people. Or pocket it)
Not sure this aligns the costs/benefits/incentives. People put out money when they want something, & who wants more users on their instance?
Self-replies
There is sort of a perverse incentive to not donate to the admin because the more people on the server, the worse moderation will be.
Maybe if instances with good moderation, speed, updates could create a reputation, then people would sign up for free on small open sites, get frustrated with them and then pay to get access to a larger better funded site.