But a paywall adds a considerable barrier to entry.

Indeed. We are already struggling to get users and content, adding a paywall would probably kill the platform

a paywall adds a considerable barrier to entry.

The idea is to get rid of "instances with open registrations". It doesn't mean that paywalled instances are the only way to achieve that.

• We can have more people running their own small servers to share with their friends
• We can have companies providing ActivityPub accounts to customers of their services (e.g, sign-up to the NYT and get access to any of the servers managed by Mastodon GmbH)
• We can have companies operating their own AP servers for their employees
• We can have phone/internet companies giving access to their AP servers as long as they have a contract or a positive balance on the top-up
• We can have "pay it forward" instances: admins put up donations, but they explicitly declare how much they want per active user account. The instance only accepts new registrations when it has secured the resources.