It could be monetized by showing regular ads next to content a and disguised adds as content. Also, if using the federated API, they could push some sponsored content desgized as such.

This cannoy be applied to the whole fediverse but only to instances whose owners a want monetization.

I am sure that if implemented, someone would make it work on mobile apps and others while showing a setting to “disable ads”. And there would be forks that block adds by default etc.

Maybe have a look. At what Threads are doing.