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How are we going to pay for all this?
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The distributed nature of Lemmy should make things more manageable. Personally, I'm running an instance on a dedicated machine I already pay for, so it's not costing me anything unless storage skyrockets. Many other instance hosts are also hobbyists that don't mind covering the costs, and may take some form of donations locally on their sidebars.
There probably should be a built-in feature for instance admins to enable a local donation button to contribute to their costs, though. While Lemmy is fairly resource-efficient, larger instances are eventually going to require pretty beefy VMs to keep up with the traffic, image uploads, etc. I could see some instances randomly vanishing when their owners can't/don't keep up with their bills (which would force users over to other instances), but ideally if any instance owners can't afford to cover it, they hand control over to another community member to pick it up.
In general, Fedi admins simply close registrations when they can't keep up with an influx of new users, and point people to other, smaller instances
Closing registrations is all well and good, but can't activity / load still skyrocket as users from federated instances subscribe to, comment on, and post to their communities?
It will, but Lemmy is fairly light, so I doubt it will be critical. Fedi is about community, so in case of load problems people will crowd fund existing servers and host new ones
This is pretty much my exact same situation as well, plus I get so few opportunities to "pay it forward" so to speak, and now is finally my chance to do so.
Can I ask about the server load? I have a Plex server sitting around doing mostly nothing. I don't want to compromise that experience, but I've been thinking about starting an instance.
I was thinking about setting up a Pi to host a small/personal Lemmy instance, do you think that's a reasonable plan? I have no clue how resource intensive Lemmy is. Was thinking it could be nice to store my and friends' personal data on our own server instead of some random remote server (to some extent obvi).
Yes it should run perfectly fine on a Pi, at least for a small instance. You will need to get ports forwarded or setup a reverse proxy if hosting at home, since you'll need to generate a valid SSL cert (i.e. Letsencrypt) to be able to connect to the federation