Yeah, badges of distinction are one of the reddit things that Lemmy is trying to get away from.
This system is closer to old message boards than Reddit.
What the hexbear instance has done is include a donation tally in the footer and occasionally promote featured posts calling for donations when they're needed.
Zero tolerance for fascists, and zero tolerance for state propagandists.
The fact that Lemmy is federated means you don't need to be tolerant of anyone and if they want to keep spewing bigotry and lies. If you make it impossible for them to exist in an instance they'll have to either give up or spool up their own instance that we can isolate.
Because running an instance requires some organization, maintenance, and money, anything that becomes too isolated from the rest of the fediverse will eventually die out.
That's a bit complicated. Account handling is by nature of federation, linked to your source instance. There is discussion on GitHub about moving account export up the chain just to help people move from lemmy.ml to other instances.
Keep that discussion pinned and if you want you can see if you can help with a PR if you're able.