For context, the identity service optionally maps email addresses and phone numbers to Matrix IDs. It is not an essential part of most Matrix workflows, and does not affect the protocol's fundamental decentralization. To wit, in several years of using Matrix -- personally, at Mozilla, and very recently as an Element employee -- I've not once interacted with the identity service.

It is very important for some workflows, and we certainly need to do work to meet your concerns, but it seems a bit much to call "bullshit" on the entire project for this particular optional case.