Monero undergoing a conversion into a Layer-2 obfuscation protocol would solve so many issues. If anyone can figure out how to make a Liquid federation able to sign for the on-chain multi-sig while staying anonymous, it's Monero developers.

The downside of this is that XMR would have to go to zero. If current XMR stake was sold to the federation owners for proportional percentage of the fees generated by the new federation, that's probably the fairest way to do it. There's no pulling it off without someone getting screwed though. Cost of making a failing investment.