We are using existing software: currently GoToSocial and Akkoma are the ones that we are prioritizing patch efforts on, in order to support our needs as a site. Patches for other software will eventually happen; our hope is to have a diverse array of types of nodes.
Our current guidance (though not yet formalized) is that any instance operator should try to keep their node to a manageable number of users for their moderation team. This means no open enrollment; operators should either manually approve accounts as people apply to join, or set their community to invite-only. That has the side effect of keeping obvious bad actors out.
The intent is that, while there is still the same workload (plus federation and governance overhead), it is spread out among a much greater number of people. It's much easier to moderate a site with 50-100 people on it than it is to moderate a site with 20,000 people on it.
This also means that nodes will not require the computing and financial resources of, say, a Mastodon node with a large number of users. GoToSocial is lightweight software, and it should be easy for most instance operators to pay for their hosting out-of-pocket. Our central infrastructure is a little more heavyweight, but so far, it's being paid for by one of our members.