To my understanding, Mastodon instances are simply VPS hosted web sites. And if they are successful, then they are high-traffic hosted websites.<p>In lieu of a VC-backed slush fund to throw as their cloud provider bill, how are popular Mastodon instances paying the bills?
Generally either donations from users, or paid out of pocket, or some combination of both. This has, broadly, worked fine for years.<p>> And if they are successful<p>Do you mean "if they grow big"? Because that's generally seen as the <i>opposite</i> of success, on Mastodon. Large instances have fairly unavoidable moderation and operational problems (and also become increasingly more difficult to fund, because there is less social cohesion).
The ones I've heard about are self funded by those that want to donate their time and money. That's why Mastodon will never be a true competitor to Twitter and Threads. There's no permanent way to finance it.