I guess it's one of those things where I'm seeing a different reality from everyone else, but the notion that uncensored speech is the source of our present strife is one that I don't accept. I witnessed this series of events:
1. Early 2000s created a bunch of social media websites with free speech (then meaning protection from Christian-right censorship, which was the concern at the time) as a premise. These were fine places. There were occasional nutjobs and constant arguments, but people were generally comfortable participating. I argued with racists one day, communists the next, fascists, nazis. I developed a deeper understanding of my own beliefs on those issues. I argued against but was eventually convinced by drug legalization, trans rights, abortion rights- the list is long and embarrassing.
2. These websites saw an opportunity for growth, accelerated maybe by Facebook's IPO, but starting somewhere around the late 00s. The nutjobs and arguments were a turn-off to a potentially larger user base. So they drew a line in the sand, clefting the population into the would-be-censored and the would-not-be. The would-bes had to go express themselves somewhere else. If I wanted to argue with fringe people, I had to go into their echo chamber. It was not the place for me.
3. Opinions that were common on both sides in the 90s became opinions of the right only, and then became forbidden. The line in the sand moved leftwards. Little effort was made to convince anyone that these changes were good (I agree they were); mockery and 'educate yourself, bigot' became the norm. Extremism grew rapidly in both the de jure right-leaning spaces and the de facto left-leaning spaces, because the two groups had entered into feedback loops. Remaining holdouts were forced to move because expressing correlated viewpoints was now faux pas, and they faced guilt by association.
4. Sometime around 2015, people collectively decided that everything needed to be political all the time. This was a moral imperative. My apolitical communities were overrun by propagandists of one side or another (mostly the left, but I was on Reddit so that biases things). As Trump's campaign wore on, people concluded that the issue was not enough censorship, and added more.
5. The situation worsened, and COVID made 'misinformation' the new pro-censorship buzzword. More censorship was clearly the answer. Lab-leak theorists were suppressed and the Hunter Biden story was censored weeks before the election. Any remaining general public trust in the institutions responsible and their allies faded further. Election doubts festered the same way everything else had and we wound up with Jan 6.
6. More censorship?
7. Profit
That's just my personal experience, and I recognize that others see things differently. On top of that, fascism gained power a number of times through the 1900s, which was pre-internet, and often did so in censorious environments like Weimar Germany. Things like climate change denial and anti-vax both predate mainstream social media. All-in-all, blaming the lack of internet censorship for our polarization and extremism today falls very flat for me.
Setting all of that aside, it does not make sense to me that we should restrict human rights because some corporate algorithm amplifies hateful or extreme speech. Rewrite the damn algorithm.
I do like your federated karma system, and I have also thought about things like opt-in moderation (to enable opposing voices to occupy the same space comfortably) or a small limit on comments per user per day (to prevent things like 1% of twitter users write 80% of tweets, and encourage higher effort contributions). I don't think these solutions violate free speech, and they may produce better outcomes than 'don't censor'. But 'don't censor' would be a great start.