This project - Swadeshi - it's an idealistic and foolish idea. Which is why I'm interested in seeing where it goes. I generally make pessimistic assumptions, and I'm assuming this project will go no where. But we still need audacious ideas. Even if the concept itself doesn't succeed, the project may create and disseminate related ideas and technologies that could be transformative - a successful failure.
What follows are a few blockers, or possible failure modes for Swadeshi. The biggest potential issues are not with the technology, but with the ecosystem it has to live in.
Network Size - Facebook, Twitter, et al. have the great advantage of having huge numbers of users. To use an alternative requires not only that I adopt the alternative, but that that I convince some significant part of my friends/family/society to use the same.
It's like Bitcoin - Bitcoin is not that difficult to use, and has a number of features missing from traditional currencies. But the great potential utility of Bitcoin comes from having nearly everyone use it. Currencies, like social networks, require large numbers of users to be widely useful.
One important exception is for users who can't or won't participate in "normal" currencies or networks. Which is why Bitcoin became the de-facto currency the Silk Road and other black markets. And why, initially, Swadeshi will most likely be used by those groups who can't openly participate the normal social networks - child pornographers, white nationalists, islamic fundamentalists, freedom fighters, revolutionary groups, etc.
The danger here is that "stink" or "danger" of these out-groups will be associated with the project in popular consciousness. The network may be de-centralized, but people still think hierarchically. Swadeshi could easily become "the kid-toucher's social network" much like "Bitcoin is the Sewer Rat of Currencies"
Capture - Swadeshi is de-centralized, so there's no single entity controlling the state of the network. But that doesn't rule out capture. Look again at Bitcoin. The idea was to create a virtual currency (which it did). But it was quickly captured by speculators to the point of crippling the network. Control and capture are two different things, and solving for one doesn't preclude the other.
Facebook can still win - Suppose the Swadeshi project gains millions of active users. That's real momentum for a Facebook replacement. But Facebook can still win by embracing and extending the technology behind Swadeshi. Facebook could be all-Swadeshi under the hood, but present the familiar FB interface, with their value-adds of Photos, Groups, Pages, etc. Moderation could be FB's major advantage. If Swadeshi is the wild-west of social networks, FB could bolt on their anti-spam and abuse reporting mechanisms to tame the unruly bits.