hi I'm experiencing the same problem with dragonrise usb encoders. I bought a set of 2 joysticks with 1 encoder each. I can plug player 1 or player 2 seperately and they both work fine. As soon as I plug both in, the pi starts to slow down everything becomes j**ky and unsuable. I did notice that both encoders have the same joystick ID 0 GUID etc.
I have configured only player 1 with all the same button configuration.
I too have the red led on the boards start to flash when I plug both in.
All I found are old forum posts from 2016 -2017 which I think are too old to even concider.
Raspi 4 8gb ram + Recalbox v8.0 fresh install.
@Paiuli363 have you found the problem?
Thanks