I attached the encoders datasheet. I set the encoder up, and only use A, B, GND, and VCC (3.3V). I set up an MCU to interrupt during every rising edge to detect A & B signal changes. This works fine for 10 bit resolution.

I do not understand what U, V and W pins are for though? Can anybody explain?

 

hi,
They are optional Commutation outputs, see this vid.

E

 

As Eric says, they are commutation pulses typically are used on BLDC motors, see relationship for alignment.
Max.

 

Perfect, thanks guys.