It was a protocol used mainly for text communication. The fediverse is far more than that already. It’s not the instances that matter but the services that the fediverse offers. It is a unique tool on the internet to connect different platforms. I don’t know of any alternative that can do it that way.

Also I wouldn’t say that XMPP is dead it’s just that less people want to use it anymore. but that depends on us users and no one else. I, for example, still offer to switch to XMPP for my communities and recommend it to others.