✅ You could have a multisig storage where members cooperate to emit redemptions

✅ You could eliminate the API single point of failure with a neutral comms layer like Nostr that uses identity keys to get signatures from members (chain only, not applicable to Lightning)

Where it gets technically impossible is you still need to have a master or a multi-master election that coordinates those signatures. The FROST stuff relates to simplifying this, but I don't see how it solves it completely as there's still bi-directional coordination required which means a single point of failure. Failover scenarios from that get complex and gameable and therefore fragile.

It's less about can the custodians run away from each other with the coin, in as the system much stops you from redeeming your shitcoins for sats.

There's no way to redeem via Lightning in a federated way given the nature of channel construction, so MoE justifications mentioned elsewhere are bunk. If you can afford to MoE on chain you don't benefit from a custodian at all.

Using the Liquid example which is allegedly distributed among large business with their own reputations to protect, you still have to trust that is the case and that the keys are distributed and only distributed in the way they claim.

Since it all boils down to trust at the end of the day, you may as well trust a single entity whom you can hold accountable. If you don't want all your eggs in one custodial basket, spread your eggs around to multiple baskets, not some rube goldberg machine alleging multiple custodians are holding your single basket.

Federations exist for no other reason than to offer is deniability to the custodian, there is no added protection for the user at all.