If Obsidian actually reads this and cares about revenue - you are leaving money on the table here. Just think about it for a second.
I wish I could just pay $100 and forget about my devices sync for a year, just use your service and not waste time on research to find a DYI alternative. But you don’t have MFA, which makes me think what else did you screwed up? Redundancy? Backups? What exactly do you mean by “end-to-end encryption”? Simple server-side TLS is “end-to-end encryption”? Do all users encrypted with the same key in transit? How about encryption at rest? Do you use MFA for your own infrastructure?
Don’t get me wrong - I don’t try to discount everything you did in the UI and how amazing the app itself is. You are years ahead of competition like Confluence and Evernote, who to this day fail to understand that Markdown is a thing. But desktop and backend programming are very different, and your expertise in one does not tell anything about your expertise in the other. I do not have faith in your competence on the backend at this point, so I want to take care of it myself, so you will not get my money. Surely Google Drive not going to screw up with my data, it has end-to-end encryption as well as encryption at rest, and they do all sorts of MFA starting from the basic TOTP and into the U2F/FIDO2/WebAuthn lands.
Now think, how many others like me are out there but not wasting their time to tell you about it? This is such a low hanging fruit - any reasonable PO should see that and make sure it is done next week. And if you really are just 2 people and 2 cats and don’t have any POs - take my free advice AND JUST DO IT TOMORROW! This is important. This is your face, first impression, this is how you loose potential customers, big enterprise customers - every hour. C’mon, TOTP is 5 lines of code in any language - start with that, fancier MFA methods might come in later.
A hash of the salted password is sent for additional verification along with the login token.
What does it matter if it’s a hash or clear text password if it can be intercepted in transit and then used to decrypt? You basically just confessed that Obsidian have all the means to read the user data, what “end-to-end encryption” is your home page false advertising about? Stop embarrassing yourself.