I'm willing to bet that most people who are leaving are doing so out of boredom. Sure, some newer players have quit because of lag, and a few players have been permanently banned. But I know of at least 20 players who have gone inactive because they're bored.
There's tons of stuff to do on this server, but you can only visit each warp, PvP, build, or do a job for so long. After a year, doing the same thing every day gets boring. There's nothing to "fix" because people will eventually get bored no matter what.
Some temporary solutions would be to add or improve more server warps, which is being done (library, campground, mall, etc.). Even island improvements would help, like what's being added to Runnerboro and Bunny. Another would be to add more plugins, which would cause more lag and drive new players away. I guess some less-popular plugins could be removed to make room for new ones, though.