Hypothetical: What would happen if every user in the fediverse hosted their own server?
What would happen if instead of users swarming existing servers when a fediverse service was put in the spotlight, each user spun up their own micro-instance and tried to federate with existing servers?
There's always the odd person who decides to host a personal fediverse service in their homelab for themselves, but would the fediverse work if that was actually the primary mode of interaction? Or would it fail in a similar way to now where the servers which receive the most federation requests need to scale up?
Presumably the failure modes for federation are easier to scale than browser requests since it's an async process.
What you're describing is no longer federation but full P2P. From a purely technical point of view, it may work, but the biggest problem will be abuse (spam, excessive resource use, illegal content). When a new instance shows up, how do you know if it's a spammer or not? And if an instance is blocked by another instance, whose side should you be on?