The instance seems to be mostly right wing trolls. I know defederating is unpopular but I don't think much is to be lost in this case and it can save the mods some headaches.
Edit: the response on exploding-heads.com to my reporting of transphobia. Courtesy of the "second in command"
I often hear the argument "they'll just go elsewhere," "they'll just start new accounts," etc, to defend not censoring/defederating/blocking/whatever fascist or proto-fascist people or sites. That's not an argument, that's a commitment to rolling over for fascists and intolerance. They're bringing the fight, and not fighting back and making their lives harder is just helping them move the Overton Window further to the right, and making horrific ideas palatable.
If we just left it at that, I'd agree. Reddit had a handful of right-wing media watch subs that would track and report when someone said someting egregious, legally gray or in light with the fascist movement identity (e.g. mythical history to justify legitimacy.) That can not only be used to expose their mask-off faces to the public, but in instances where incitement or threats turn into action, it can be reported to investigators to help track down key players.
So, much the way backpage was helping law enforcement track human traffickers (who did business on backpage) we have the option of leaving them be, but to exploit their intra-sect candor.