What does the "encrypt chat" do?

When right clicking on a contacts name you’re given the choice to encrypt chat. What exactly does this option do? Is this enabling end-to-end encryption for the two people? Is there a why to turn this on by default? I’m pretty new to TeamSpeak in general, and I’m testing out a self hosted server currently. I assume direct messages aren’t saved in any servers tho, correct me if I’m wrong.

I can’t answer the main question, but…

I assume direct messages aren’t saved in any servers tho, correct me if I’m wrong.

This is correct, direct messages are on TeamSpeak’s servers, not your own.

Yes after enabling it, the chat you’ve selected is now permanently E2E encrypted. E2EE is only available in the global chat and can’t be enabled by default.

The messages sent on a TeamSpeak server, are not stored, rather only users that are currently online will receive it directly.

The messages that are sent in the group chats or directly to your contacts are stored on our Server and we therefore provide the option to use E2EE.

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Are you sing matrix Olm library for e2ee?