encryption in matrix is still very much Work-in-Progress[0]. It will use olm for encryption, which is AFAIK, just an axololt implementation (the protocol behind Open Whisper System).

There's no concept of finding "peers" in Matrix. It's more akin to xmpp : each user is attached to a Homeserver, which can chose to federate to one or multiple other HSes. Users may then create rooms on their own HS (or the HS they federate to) and other users may join those rooms, similar to IRC.

[0] http://matrix.org/speculator/spec/drafts%2Fe2e/client_server...