Yeah, but that’s solved through cross-login, which I’ve already seen used at least once in Pixelfed. Logging in with a pre-existing Masto account and importing your follows should have been the default solution, but I understand how the tech may not have been in place.
Oh, let’s not have the Masto instance chat here. Sure, the UX for onboarding is terrible and the community’s obsession with what is ultimately a trivial concern is a problem, but that’s not a problem in search of a technical solution. Masto would have stood a better chance if it just defaulted to Mastodon.social by default, because end users shouldn’t have to know or care what instance they are using on first contact. The only reason fedi advocates obsess about this to the point of borking the most important bit of social media UX is the fiction that all instances “deserve” the same level of discoverability for some reason.
Also, invite-only instances are already a thing, at least on Masto, and as far as I can tell nothing keeps you from making a new federated app that requires invites, so this feels like a bit of a non-issue anyway.