Lemmy is going to be in the "let's see how this works" period for a while

I hope someone more knowledgeable and patient will come and provide a more detailed reply but the gist of it is that Lemmy is paid by the admins of each instance.

Lemmy is a framework, not a specific site. It allows anyone to setup an "instance" (like an individual lemmy-type site/server) and communicate to each other. If some admin has limited funds, they can limit the size of their instances to keep the costs down. If another admin has deeper pockets, , then they can make a large instance with thousands of users.
For example, the framework allows admins to limit the size of uploaded images. So a small instance can limit the size of pictures to 1 mb to save storage space and bandwidth.

Edit: As for the development of the framework itself, it's an open source project. It's built on the goodwill of volunteer developers. The lead ones are very left learning (to avoid flame war) and might keep supporting it just to throw a middle finger to the big greedy corps. They gotta eat though, so donations are certainly going to be welcome.

Edit 2: I wonder how bad the userbase would react to someone using lemmy for a setup like that of animanch.com. The admin of that site keeps a fairly active public forum that he uses to farm content to post on his monetized blog, which in turn supports the cost of said forum.

In the case of this instance (lemmy.fmhy.ml) it appears to be self funded by the admins

Q: Can I donate?

A: We appreciate that people want to support us, but we never have and never will accept donations. We maintain this project because its fun and we want to help others, not make money.

https://www.reddit.com/r/FREEMEDIAHECKYEAH/comments/xrxen7/faq_support_thread/

However currently for others instances donations seem to be the primary method of funding (beehaw has a nice cost breakdown)

Edit FMHY link to beehaw post:

https://lemmy.fmhy.ml/post/509214

Beehaw direct link to post

https://beehaw.org/post/920683

https://beehaw.org/post/428209

Good answers here, but to summarize some points and elaborate on others:

• Ultimately it's the admins that choose to stand up an instance who are responsible for that instance's costs.
• The costs are well within what many hobbiests can afford, so some admins aren't asking for help, but many instances have donation links in the sidebar or pinned posts.
• The developers are also self-funded, and for many it's a full time job; they also have donation links, and I personally think this should be a high priority for people who are able to contribute and want to see Lemmy grow.
• Yes, a well-funded outfit/person can stand up a big instance with more resources than others, with intent to somehow turn it into a business (e.g, selling ads). That's fine; no one has to go there if it's not worth it, and other instances can defederate if they cause actual problems.

I did a one-time donation to my instance admin and another to the developers for now. If I stick with this, like I think I will, I'll probably do some monthly thing.

Are you asking about instances or about developing the platform in general?

The costs to push data are fairly trivial at the moment. Where peertube will struggle due to technical barriers (mostly just storage/duplication), text and images are just not that taxing.

Let me assure you whole it sorts itself there's no shortage of people throughout the history of new cool things who want to host and play with them. We're probably headed to maintain those through foundations/donations.

The cool part is just like email you shouldn't have to be permanently synchronized, meaning you could run an instance you collect like an email client at near 0 cost to anyone.

Honest to god if the instance I'm in puts a link to donate with bitcoin (or other cryptocurrency) at the bottom of the page (like the pirate bay for example) I would donate.

One thing to take note is that the idea to have many smaller instances so the userbase is broken up and doesnt reside on just one instance. So, it's relatively cheaper to host and maintain instances.

People willing to host and a coalition of those who want to fund those efforts with no motivation other than an altruistic desire to support the platform. Some will succeed, some will fail, ideally it becomes normal to sustain something for which you derive value given these platforms do not seek to profit and can have transparent conversation on their finances. It reminded me of public radio in many ways which, other than sometime bluring the lines corporate underwriting, enjoy most of their financing coming from people of their own free will.

I'd be down to fund a patreon for the core developers who work on the lemmy framework so long as that money goes to developing tools that would enhance everybody's experience like better modding tools that were lacking in reddit or accessibility features that tended to be found in particular client apps of reddit or plugins than in the site itself.

So I'm reading all answers here, and one thing come to mind - it's seems like it inevitable, that bunch of rich guys gonna host some of the most populated instances, if Fediverse get traction? For purpose of advertising, self promoting and all that?