The UX should be more "mass user" friendly if the goal is to attract mainstream users. Sign in with Apple/etc.. selecting a server is technical language and not end-user language etc.
What percentage bounce at that stage? It's probably large. I did so, and although I later relented and created a Mastodon account I've felt emotionally biased against it ever since and barely use it. When I have used it I don't experience any tangible benefit to overcome my reflexive dislike. The network effects aren't anything great, the timeline/feed mechanism and presentation are not fundamentally different from other social media offerings, the QoL improvements are marginal. If I cared about architecture and ideology above all else it would be great, but what I actually care about is being able to get news faster than any other source and being able to find more people there than anywhere else. I can only think of 1 or 2 people who I check in on periodically via Mastodon because there's no other place to find them.
I'm not sure what sales funnel you're talking about. If you have an aversion to monetization, I'm not sure what social media you'd use except the fediverse.