The IXARC rotary encoders now include housings that are only 27 mm long. This reduced length, combined with a diameter of only 36 mm, means that these super-compact devices are ideal for tight spaces.
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) ...