A ring or arc of LEDs that surrounds a rotary encoder and visually indicates the current value of the parameter that the encoder controls. The collar is an attempt to solve the problem of the fact that a rotary encoder is not indexed; when looking at, it is not possible to determine the current setting. The LED collar solves this by lighting LEDs in sequence when the encoder is turned back and forth, to indicate the current value.
When used on a synth with patch memory, rotary encoders have the advantage that when a recalled patch is edited by turning a parameter knob, the parameter changes starting with the recalled value rather than instantly jumping to the knob's current position, as it would if the knob were a conventional potentiometer. On a synth using rotary encoders and LED collars, when a patch is recalled, the collars will indicate the recalled value. The encoder and collar are a less expensive (and probably more reliable) alternative to motorized controls, which are physically driven to the recalled parameter values when a patch is recalled.