Yes, yes there's encryption. Right now I support XTEA encryption. As of now, it's best to encrypt 32 bit chunks (4 bytes), so I do a microsecond timer value (32 bit timer) and an entropy sample which I'm not 100% sure if it's suitable entropy but I'm using it for now.
This is because I'm not supplying an IV to what's being encrypted, so if I sent the same thing with the same key, it's the same traffic again and again.
I believe (you really have to knock on wood or be careful speaking before you've done it in engineering) I should have Keyloq encryption (which is just another option) and AES-128 encryption in future. I can also encrypt with XTEA multiple times, to make it pretty unlikely it'll get cracked.