With other FUTO products they ask that you buy them, but also give away the source. Perhaps they could use that model here as well.

They do, they keyboard's source is available from their gitlab and you're allowed to copy, modify, and redistribute it, as long as you don't remove the section in the app that lets people pay them and don't sell your derivative works. Sort of a CC-BY-SA-NC deal. Seems fair enough to me — not ideally FOSS, but something I can live with. There are few things I use anymore that aren't totally FOSS but I do compromise sometimes if all of quality, ease of use, security, and privacy gain and the loss in perfect freedom is small enough.

I did not read it as a "threat".

If nobody pays they won't introduce ads; they'll more likely just go out of business.

Why an offline keyboard would go out of business? They can just stop development or keep it at bare minimum at worst cases. It's more likely this would be sold to an other company if it get popular.

Go out of business as in no more updates, as tends to happen to quite a few open source projects. Devs need to earn a living somehow.