Bit late too! It's very likely the index pulse. Basicly it should give one pulse per rev and is used by some drives for a variety of things like homing, or as a marker pulse to trigger positon checks etc etc. If ungated, its out of phase with a and b (which are 180 degrees out any way) which means between the A and B rising edges (or falling edges) you get an extra rising or falling edge which all means that homing is at twice the resolution of the encoder. 2000 line encoder with quadrauture on a 4mm pitch screw is 0.0005mm a step = v v v small to begin with but if you do have to rehome a lot during a job and are backing off from a home switch (they get dirty and can change over time) for example could be a small growing error, but its really very very small and the tool deflection will be bigger, the following error much bigger in general. Index allows the machine to count revs and return to the same one, exactly. Sometimes there are an additional 4 wires which are the compliments but the drive clearly doesn't need them either!