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A lot of memory, and a lot of disk space.
Synapse is the reference platform, and even if they don't, it feels as if the Matrix team make changes to Synapse and then update the spec later. This makes it hard for third-party servers (and clients!) to stay compliant, which is why they rise and fall. The spec management of Matrix is awful.
So, while suggestions may be to run something other than Synapse - which I sympathize with, because it's a PITA and expensive to run - if you go with something else just be prepared to always be trailing. Migrating server software is essentially impossible, too, so you'll be stuck with what you pick.
Matrix is one of the worst-managed best projects to come out in decades.
Conduit is in no way compact either. I tuned its caches because two gigs of ram seemed ridiculous for a single-user instance but I only got the mobile client sync lag as a result.
XMPP used to be so much nicer...
The problem is the design is Matrix itself. As soon as a single user joins a large room, the server clones all of the history it can.
I mean, there are basically two fundamental design options, here: either base the protocol over always querying the room host for data and cache as little as possible, or cache as much as possible and minimize network traffic. Matrix went for minimizing network traffic, and trying to circumvent that - while possible with cache tuning - is going to have adverse client behaviors.
XMPP had a lot of problems, too, though. Although I've been told some (all?) of these have been addressed, when I left the Jabberverse there was no history synchronization and support for multiple clients was poor - IIRC, messages got delivered to exactly one client. I lost my address book multiple times, encryption was poorly supported, and XMPP is such a chatty protocol, and wasteful of network bandwidth. V/VOIP support was terrible, it had a sparse feature set, in terms of editing history, reactions, and so on. Group chat support was poor. It was little better than SMS, as I remember.
It was better than a lot of other options when it was created, but it really was not very good; there are reasons why alternative chat clients were popular, and XMPP faded into the background.
You must have last used XMPP more than a decade ago, since none of these issues still exist (except on Pidgin which also hasn't been updated since a decade).
And XMPP is also not a "chatty protocol, and wasteful of network bandwidth" at all. In fact it is using significantly less bandwidth than Matrix and works on extremely shitty connections. It is basically the exact opposite of what you say.
They are the definition of move fast and break things. And they just keep breaking things while not even being that fast. But still there is nothing to replace it and the work they are doing is valuable.