With large instances there comes the responsibility of moderation

Sure, so long as it comes with the responsibility of the users to pay, they get to have a say in moderation.

Otherwise, they get to vote with their browser: Use the site if they like it, do not use it if they don’t. And the same for the software. Don’t like Mastodon, use another microblogging software.

This is the key underlying idea behind the federation of activitypub. Do not undermine it. This is not Reddit, or Twitter, or whatever. This is not a central place, it does not need central evolution, vote by abandonment.

(and I’m not saying I agree with Mastodon’s dev, seeing how I couldn’t give a rat’s ass about microblogging in general, but again, it’s his instance, everyone is free to use whatever they agree with)