| That's a rotary encoder, not a pot(entiometer).
A pot. sets the resistance in a circuit depending on the wiper's position on the resistive material. The resistance is a particular value all the time (or at least, until the position is changed).
A rotary encoder provides the circuit with a degree of change, rather than a specific value. The circuitry "reads" the encoder continuously to determine whether it's changed from its previous position, how much, & whether it's "up" or "down". That amount & direction of change is then applied to another component, such as a voltage-controlled amplifier (VCA) or a digital pot. that actually affects the (preamp gain) circuit.
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