Of course you shouldn’t but there is a categorical difference between the risk of a corporation exploiting you because of a power imbalance (you want to use Reddit, there aren’t alternatives in this hypothetical scenario) and the rando running your fediverse instance abandoning the project or being weird about your data.

The second category can definitely be problematic, but it just isn’t the same level of awfulness and systematic exploitation that corporations wield every day to extract a profit.

It sounds like a weird statement because we have been trained to think the average “other” we will encounter in society as dangerous, but if you actually think about the statistics then yes absolutely it makes way more sense to trust a random person or handful of people to run your instance than a corporation. Publicly traded corporations are legally required to be assholes in the pursuit of profit, on the other hand most of the time randos usually aren’t assholes, though to be safe you should always be cautious as you say.