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Yeah, Relays are one way to do that. I've mostly skipped them because they're an invisible optimization and there are other strategies. E.g. many smaller apps today rely on Constellation (https://constellation.microcosm.blue/) instead of building their own database index, so they don't use a Relay at all.
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They do remove content directly from relays. They claim they only remove content that is illegal to host, but I don't know how true that is, and there is always the risk it could change in the future.

https://docs.bsky.app/blog/blueskys-moderation-architecture#...

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I want the bsky org to be able to choose what content they host (and I think the internet would be a better place without section 230 protections allowing hosts to ignore the content they distribute); the promise as I understood it was that relays could be hot pluggable. If someone stopped carrying content (maybe it was illegal in /their/ region and not yours) you could failover to another relay.

However there is very little incentive to mirror any of the firehouse if someone else is doing it for free.

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If a relay was silently dripping content how would you even know?
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If that becomes a massive problem - host a relay with different moderation policy.
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The scale-down floor for running an ATProto relay or appview is much, much higher than the floor for running a fediverse instance.
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You can scale down as much as you want. You don't need to run full relay if you want to follow only a dozen of accounts. I bet you can run something like that on a raspberry pi or something similar. You will not get the search over all of the network, but that's something you don't get with your personal mastodon instances either.
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Wouldn't you then not be able to see replies from anyone besides the dozen accounts your relay follows too? If I run a personal Mastodon instance and someone replies to one of my posts, their instance will send it directly to mine and I'll see it. My understanding of the ATProto architecture is that it doesn't support directed messaging like that.
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The cost for consuming the firehose of the entire network is very low. So the actual cost that can blow up is storage and computation.

If you want to filter for events based on some heuristic (e.g. only from follows of server list), you can do that. You can then specialize that further. E.g. for ongoing threads that already pass your filter, you could add their IDs to an array, and accept all replies for those threads as well into your DB.

You already get a stream of everything so you can scale down what you write to DB to exactly the characteristics you need. Including keeping threads cohesive.

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To refer back to the comment I was replying to: is that the sort of thing you could realistically run on a raspberry pi? At home?
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Yeah! In fact some popular ecosystem services are (or at least have been) running on Raspberry Pi. See here: https://bsky.bad-example.com/can-atproto-scale-down/

Also the best algorithmic “For You” feed on the app runs off someone’s gaming computer at home

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Since sync 1.1 last year, you can run a relay on a relatively small VPS
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