Basically, volunteer code commits, volunteer admins, and donations for hosting costs.

Fosstodon is a pretty great example. It’s a fairly large mastodon instance which makes enough in donation revenue to pass some on to other open source projects. It’s not heaps ($600 in 2021), but I think it demonstrates that donations are a viable funding model. If things got tight I expect the community would meet the challenge.

It’s not like you need to build a custom data centre - it’s just renting a server, maybe even a VPS.

That said, of course the admins and mods are volunteers. I’d like to imagine that one day a few lemmy instances could charge a subscription fee for a premium, well managed experience.

The situation in November with Fosstodon (Mastodon instance) & Twitter might be analogous.

Fosstodon had about 20k users, at the start of November, and more than 50k by the end.

There was definitely an initial surge of activity which diminished after a time, but it didn’t return to it’s previous level.

I don’t have the data but the vibe is that the users to activity ratio stayed about the same, now 6 months on it feels like there’s 250% of the activity that there was at the same time last year.

Of course loads of people are creating accounts here just to have a look but will probably never post, but there’s also plenty of new users who will be engaged long term.