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It's worth noting that they specifically state that for Gmail they can use OAuth through the refresh/access token system. Hopefully they do this for all other IMAP servers that support OAuth (there are a couple of them now).

However, for traditional IMAP/SMTP servers your point is well taken. They must store your credentials in a restorable state, which, however carefully you do, has difficult security implications.

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It's a proxy. It doesn't need to store anything. The server asks for a password, the proxy asks the client.

In order to inject content into the stream, they must be able to decrypt and interpret the stream. It is not quite as simple as a traditional proxy which may not actually have to know the content it is transmitting. They must have all content you send over the stream for a short period of time in-memory in a restorable (if not plaintext) state in order to read from the client's IMAP stream, interpret, then send over the IMAP server's secure SSL stream. The short period of time over which they must keep it does not free them from the security implications. All an intruder must do is gain access, then monitor the stream. I'm not saying that this is impossible to mitigate, just that you're trusting them to do it right.

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