Here’s an idea: form a voluntary “Fediverse Code” that limits the size of instances to a small number. Say 100 or, at most 1,000. Any instances larger than that size are blocked.
The mega-instances we have today, like .social, voluntarily agree to cull their numbers over a period of time; aiding the migration to other instances.
The fediverse is already hugely centralised and unless we do something about it, it will be ruled by a handful of feudal lords/Mini-Jacks.
CC @Gargron