Pictrs 0.4 recently added support for object storage. This is fantastic, because object storage is dirt cheap compared to traditional block storage (like a VM filesystem). This helps a lot for image storage, which is a large part of the problem, but it's not the whole problem.
I know Lemmy uses Postgres for everything else, but they should really invest time into moving towards something more sustainable for long term/permanent hosting. Paid Postgres services are obscenely upcharged and prohibitively expensive, so that's not an option.
I'm armchair architecting here so I'm not sure what that would look like for Lemmy (Cloudflare KV? Redis?)
Still, even my own private instance has been growing at a rate of about 700MB per day, and I don't even subscribe to that many things. I can't imagine what the major instances are dealing with. This isn't sustainable unless we want to start purging old data, which will kill Lemmy long term.
EDIT: Turns out ~90% of my Lemmy data is just for debugging and not needed:
https://github.com/LemmyNet/lemmy/issues/3103#issuecomment-1631643416