It would be nice if federations had a purpose in game instead of being a symbolic group of colonies. I have made a list of features that I think should be added to federations in My Colony 1 or 2.
1. Federation territory: federations should have the ability to control a section of space on the the my colony grid map. Perhaps they could annex ungoverned space using starships. All colonies located in the fed territory will have to abide by fed rules, even if they are not a part of the federation. This means the federation would be able to tax all subservient colonies and commonwealths, impose restrictions on their production capabilities, and more.
2. Fed wars: to make the game more dynamic, federations should have the option to go to war with each other to gain territory. When 2 feds declare war on each other, they will each send star ships to start attacking each other. The starships will be sent out in batches and controlled by players in each federation. In order to capture territory you must fly your starships over enemy territory for 5 minutes, after which a chunk of the territory will be siezed. There are 3 ways to end a war, 1st is to surrender, and let the other side take full control, the 2nd is to negotiate an end, and the third is to capture the the main colony of the commonwealth that is currently leading the opposing fed resulting in a complete victory. If you choose the second option you will still lose some territory but your fed will not be erased from existence, like if you where to surrender.
3. Federation eez and other economic features: federations should offer some kind of economic zone where all members can trade freely and establish colonies without fear of them being annexed. This will give players another reason to join federations, especially new players who still need help to Jumpstart their economy.
Thats all I have for now, tell me what you think in the comments.