Unsure how distributed federated services prevents the reddit downfall, aside from corporate greed. Which can also be solved through legally binding agreements/foundation-controlled companies. Among many other solutions that can avoid funding, stability, and consistency issued federated services have and will continue to have.
It's all a tradeoff. To tradeoff corporate greed you now have community fragmentation and fragility risks as any instance can be taken down whenever, and any unhappy user that created communities can solely kill them off (As stated by some users threatening to do so in another thread)
#2 sounds good to say, but barely works in practice when you're talking about infrastructure costs in the tens of millions of $ per year for something at scale...
Essentially saying nice things that don't effectively translate into reality doesn't solve problems. It just perpetuates a lack of critical thinking.