Earlier quoted context omitted.
While the damage is severe, I don't think it's permanent. Mastodon is far from a powerhouse, but is chugging along happily with a slowly growing user base. Matrix arrived just in time to help prevent Slack and Discord from becoming the defacto real-time communication systems for open source projects. Even SA is starting to heal now that it's out from under lowtax and his bullshit.
I agree with you. But I do think Mastodon and Matrix / Element all have a marketing problem. It's seems to be "here's a clone of a service you use but you own your content". I'm not saying that they don't do things better but they don't market it that way. To beat Twitter be better than Twitter. Make something memorable and unique, give features that beat the stockholder driven choices of the other guys.
I used to open with the fact that it's federated, but it's a much harder concept to sell initially. People do appreciate it later on though, when they find out they can follow and interact with a bunch of other social networks and communities.