Thats the problem. It would be very difficult to get a new instance off the ground unless you were an insider or had inside connections. If you have a cabal of existing admins acting as gate keepers you could keep outsiders from abusing the system easily, but you are also walking right back into the centralized control federation is supposed to prevent.
Old games are pretty much the only use Ive ever seen. The keypad can be used as arrow keys, but with diagonal options and the ability to easily switch over to numbers. Nethack, for instance, is extra challenging without a proper numberpad.
The big problem is going to be when someone decides to start spamming and vote manipulating with bot populated private instances that automatically re-spawn themselves under a new name whenever they are blacklisted. Eventually, the standard will have to move to whitelisting over blacklisting, and once that happens the whole premise of federation starts to fall apart.
And thats just Google. Amazon and Microsoft also run also have massive massive data capacity that runs large chunks of the internet. And then you get into the small and medium sized hosting companies, that can be pretty significant on their own.
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Universal karma wouldnt work for gate keeping or weighting in a federation anyway. Since the internal activity of each server is opaque to the others, theres no practical way to verify that karma reported by a different server is genuine and not internal bot activity or just manually edited by the server owner.