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When you use two factor auth, you will notice that you will get an 401 from the server.
This is solved very easily. To to personal settings, then find App passwords (as shown below).
App passwords
Create a new app password, eg passman-extension and click on Create new app password Nextcloud will show the username and a new password.
passman-extension
Create new app password
You have to use this password in the extension.