If successful, such an encoder could be cheap and very fast; it could also in part be made directly on a PCB. First prototype, two etched plates with transparent tape as dielectric material. Disc ...

Adafruit has made an I2C interface for four rotary encoders. It comes in the form of a PCB with four footprints that accept one of the most common rotary encoder forms (Bournes PEC11 horizontal style) ...