The main driver behind current social media's shittiness is the user-hostile business model that means the incentives of the user and the platform are opposed.
Federation doesn't actually address any of this, and currently the federated social media world "runs" on effectively charity. "Runs" in quotes because we've already seen instance shutdowns which caused a fair bit of trouble. It only currently "runs" because the scale is small enough that it can indeed be sustained by charitable efforts, and hasn't devolved into a unusable spam-fest because it's too small to actually be worth spamming.
If your "solution" to social media shittiness is effectively turn it into something ran by charities, that's fine but you can achieve this much easier (and more efficiently) by just having one charity run one centralized service with an open API (since the business incentives around lock-in are no longer applicable).