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A reddit instance is conceivable, but the magic of the federation is that no one instance has control. Reddit has control of every subreddit, and they'd lose that control joining the federation. Likewise, there's no financial gain from having an instance.
Instance admins ultimately still have control over communities on their instance no? I don’t think Reddit would lose anything.
I’m not sure what they would gain either. I can’t think of anything that would motivate them to join.