^ wow! really cool stuff, happy you shared that, you have a new customer

Stutter/glitch effect
The effect itself and the XY control don't have anything to do with each other. The XY pad is something cool like those Trill sensors, or a joystick, or touchscreen, etc. it just sends parameters to the µC pins it's attached to. It might as well be two pots; that's all it is, basically. Like a weird dual-gang pot. There are analog joysticks, they really are just like two pots. If you have an analog circuit that requires two controls adjusted with potentiometers, then bingo. Otherwise you need digital stuff. Do you have something in mind more than what you posted?