The central star is actually a close binary. When one star evolved, expanded in size, and became a red giant, it literally swallowed its companion. The companion star then spiralled toward the red giant. In the process, it spewed out gas which formed a ring around the binary system. Later, when the hot core of the red giant was exposed, it developed a faster stellar wind, which emerged perpendicularly to the ring and inflated two huge "bubbles." This two-stage process may have given rise to the butterfly-like shape of NGC 2346.
AURA / STScI / NASA