For some people, the game is more about survival than it's about grinding. Some only play on early worlds because there's both a sense of urgency and a sense of progression and we struggle to get our first farms and weapons. Others continue playing but often spawn alts and start all over again just for the challenge of it, but it's not the same. Some others decide to hermit because the facilities of village life makes the game unchallenging. Once you've built your brickwall and L5 minehole there's no more challenges for you: if you reached that point it means you'll never starve or need to find seeds again, and animals will never even be able to pierce your armor. You'll have essentially won the PvE part of the game.
The suggestion is that you offer players a new game mode that enhances the challenge of survival. It does mean lots of dev work, but I think it's an opportunity to attract and retain a different kind of player without harming the existing playerbase. It would be an additional feature and wouldn't replace anything.
My idea is that on the char creation screen players are given the option to choose between regular and survival game modes. From then on, different mechanics are applied to their account. What I have in mind is something like this:
. No quests.
. Survival chars are subject to disease mechanics (an old request), which affects stats, LP intake, and others. Chance of acquiring diseases is tied to biome, activity, and untreated wounds.
. True permadeath is active, and LP inheritance would not apply in this game mode.
. These characters would not be able to receive theft and vandalism permissions on other people's claims, hopefully minimizing exploits. Honestly, this idea in particular needs to be improved. Maybe also blocking use of items crafted from non-survival accounts or on non-survival pc claims.
. Aging is a feature and characters grow old, with the according stat increases and penalties.
. Food made by survival accounts decays and loses quality over time.
For this game mode to be more rewarding, the stats of survival chars would be capped at 500/510/530. Alternatively, they could have an increased rate of LP gain.
Survival mode chars could also able to spot unique forageables, not accessible to regular players. And they could also have unique crafting recipes which could only be equipped by other survival accounts and would otherwise poof like w8 hats.