This is my latest project, an RGB ring display for rotary encoders. It features an on board microcontroller to drive different patterns on the LEDs and can be configured over I2C to allow easy integration with larger projects. The encoder shaft is also capacitance sensitive, so you can detect when the user is in contact with the knob.
This project is open source hardware. All design files and source code are available on my github account at github.com/BenBergman