He designed a circuit that generates an analog voltage based on the state of those pins. He also wrote a program that can recognize the new analog patterns produced by his rotary encoder and his ...

Looking at [Andriyf1’s] schematic, you can see each coil connects to an op-amp wired as a positive feedback comparator. The result should be a fairly clean square wave from a noisy input.

Since the AS5601 performs contactless rotary position measurement, it suffers none of the reliability problems with which conventional rotary encoders are plagued.