With open source software you are always going to run into issues where a lot of the development work is done for free or as charity. You can say this is unsustainable but I use a lot of open source software and in many cases its almost as good or better than software by companies running around with budgets in the 100s of millions.

You can say the fediverse isnt growing and point to user decreases after peaks but the current active users are higher than they were before the peak and higher than they were a few years ago and thats growth. You point to one point where lemmy had 100k users and now it has 36k but before that it had less than 3k. Is that not growth? Think of how much money other companies spend to get 36k MAU and lemmy gets it through grassroots support.

In terms of instance instability you are right that instances can disappear without any notice and even with notice its not any better. With everyone having the ability to host and instance there are going to be many cases where people are not cut out for the task of long term server hosting I think everyone signing up should know that at some point their instance might disappear and be pointed towards established instance hosters. This is valid criticism and something that we can improve. The fediverse needs a way to backup our fediverse identity so we can move it around maybe some smart people are already working on this idk. Thenewsie.social example is interesting because it shows another advantage of the fedivese and distributed hosting. If something isnt working we can merge. I also looked at their expenses and they pay moderators and journalists which is cool. I checked and both instances seem to still be up and running racking in thousands in donations. I expect they will both still be here next year and the year after.

Its not like the fediverse is the only site that is prone to being shutdown out of nowhere. Even google cuts its services 1 year into running basically nuking all the time users spent on that service and giving them no alternative. At least if 99.99% of lemmy instances go down I can host my own. The amount of users affected by instances shutting down does not seem to be massive amount but maybe it can seem this way if you look on reddit since most people will go to the mastodon sub only to voice their complaints.

If the current model did not work I don't think we would have gotten this far. I would support an option for instances to be able to place ads but I also think its a bad path to go down and unnecessary.