If you mean the 2500 lines on the encoder disk end up being 10000 pulses, Neither.
Well, kinda by the software, it needs to interpret the signals from the two sensors.
It's called quadrature encoding.
Each line has two edges, one leading and one trailing, therefore there are 5000 state changes that one sensor can detect... since these rotary encoders need a second sensor(slightly offset from the first) to detect direction of rotation, it's now possible to detect 10000 state changes.
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