Converting a digital incremental encoder to an analogue voltage
so you have a bit stream with 2 bit flows (quadrature, right?)

use a binary up-down counter 74160/161 should be useful

be able to ZERO_SET the counter

then convert the counter's binary number to an analog voltage, using a digital-voltage convert (ADI should have some)

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You need to prepare a error analysis.

You have THREE  quantizers here.