Hi @Sina Roughani and @Larock1234 i believe this is possible using the custom configurable logic on many of the "new" ATtiny 0 and 1 series parts. There is a Microchip app note AN2434 on how to implement the encoder capture within the CCL. The attiny parts are around $1 or less so this is a cheaper option. You can probably configure them to output i2c if you want many devices in one system. I have not implemented it but it's on my todo list. 

Well, this is an ASIC with buffers intended for a harsh environment like in a $1-10K CNC where you may not care about $4 if it means you get a tool crash which results in loss of life or breaking a $1k spindle or simply $100 cutting tool. That being said, super glad you mentioned that and I'll spin up a board that does that today. Hope tiny doesn't mean BGA. All my homies hate BGA.

Haha, tiny means SOIC or VQFN, so everyone should be happy (unless you live in a through-hole world). 

Yes, for actual industrial (big money / safety) you can probably justify the FPGA you mentioned. 

For hobby robotics or motion systems though, ATtinies might be just the ticket. 

Oh yeah, also, I've got this surplus linear encoder with 0.1um resolution that's rated for 1m/s travel which means 10MHz clocks which is why I couldn't use an MCU in the first place. This ASIC goes to 40MHz which is comparable to what can be implemented with LUT's in an FPGA. That being said, for those that don't need that crazy level for a $2 board instead of $7 is crazy good. Expect that board by lunchtime. Devoted to you!

Published my hardened PCB and ordered 250 for $25. Let me know if you want me to mail you some after I get them.

Exactly what I was looking for! Would be great if you could sell them!

Yeah, I placed an order with JLCPCB for a hundred for $10. I shared this with Adafruit and told them they could use it royalty free, commercially, and in perpetuity, but they might want to utilize the touch probe pin as well since that's probably worth $0.50 of the chip's functions.