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It is a method of determining the error probability of a digital signal. The signal does not have to be binary having only two states. In order to see the "eye patern" you need an analog osciloscope or a digital one with large persistance compared to the input signal. You must sync the scope to the input sampling clock and view the digital signal. Then you get a view of many traces superimposed one over the other representing all possible levels. You must check that at the exact time (rising or falling edge depending on your application) that the sampling of the signal takes place the eye is clear meaning there are no traces of levels that can be misinterpreted by the input circuitry. If you can detect traces of levels that are between the nominal levels and can be interpreted as either of two different levels the eye is closed and there can be bit errors.
CRO display ur going to get when signal is having error is feeded to it via vertical amplifier input and a trigger input to the horizontal amplifier .....if signal is having more noise means....the figure will be fully closed and for no or less noise it will be opened one.....if signal is having error at point and no error some point, the figure wiil close and open..this event is like opening and closing of human eye.so,it is called as eye pattern or eye diagram..from the figure,the ratio between height of the opening at full noise to that of no noise will give amount of error present in it
It comes under "Lissajous figure"
this is a scoring point for CRO applications ..ie its usage to study error phenomena...