As long as the ads don’t federate in an un-blockable way, they can do as they like. I wouldn’t make an account there, I’d rather donate actual money than have a degraded experience (which for sure works out better for everyone), but I get the drive to monetize.

And they should absolutely -not- be allowed to federate ads, for any reason, since it goes against the vibe. But inevitably there will be “sponsored posts” (probably already are), and I think those instances/users will see themselves fade to oblivion, as long as new users are brought to understand that they could just chip in $2 and never see an ad.

I use Boost and it has ads. But they're ignorable as a banner here and there, not constantly. I can live with that.

Misskey has support for ads. Its mostly used for shitposting by admins.