The most fair method would be to only allow rare fandoms into Yuletide. Just an absolute ban on fandoms that are big on FFN, Wattpad, Tumblr, LJ, single fandom archives, etc., etc. That would require a tremendous amount of time and energy each year, however, and I fully support the Yuletide mods in their decision to not do that.

Any other method means that big fandoms will unavoidably be eligible for Yuletide. Given that fact, the second most fair way to determine eligibility is to treat all non-AO3 archives/social media platforms equally (which the current method of singling out FFN as somehow different from Wattpad, Tumblr, LJ, etc. does not do).