SCRAM is a new mechanism designed to let you sign in into your servers much more securely than with existing mechanisms. It involves applying various algorithms to your password to make it extremely difficult to hack.
The SCRAM-SHA-1 SASL mechanism was added to the XMPP spec, and replaces the legacy DIGEST-MD5 mechanism. Its various security features include hashed passwords being send over the internet, and hash passwords being stored on disk. Attackers which can read the network traffic or the server's password database are unable to do any harm.
I just finished a SCRAM-SHA-1 implementation for Psi as part of my GSoC project. There are test cases to write and wider testing to be done, but we now have a working implementation.


