Imo the best solution is to defederate from huge offender instances (.world for example)
From the admin perspective, defederating is challenging on lemmy, because instances can hold communities with different rules and audiences. .world for example is the largest source of blahaj users subscriptions because there are many communities over there that offer value for the blahaj community members.
The broad rule of thumb I use is that I will ban transphobic users or communities in a heart beat, wherever they’re based.
I won’t defederate from entire instances though unless the admins of that instance are actively transphobic or otherwise bigoted. As long as they act on egregious transphobia (which the lemmy.world admins do), then defederation isn’t on the cards