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Lemmy Federation Architecture Change Proposal
(github.com)
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Activities aren't sent on every "connection" in the network in the current model. There isn't indirect transmission nor polling so even though there's a theoretical 50 mil connections in the scenario you gave, any one activity will already only be sent up to 10k times. That's why instances require TLS and being internet accessible, so they can receive direct communication. I agree with you that there's some difficult scaling issues with federation but your representation of it is inaccurate.