What Makes a Good DAC: A Beginner's Guide to Audio

A DAC (digital-to-analog converter) is the component that translates the ones and zeros on your hard drive or streaming service into an analog signal your amplifier can work with. Getting that translation right matters, but understanding what “right” actually means takes some unpacking.

If you’re building a desktop headphone system and wondering where to start, the DACs hub on this site is worth bookmarking. This article focuses on the specific question of what separates a good DAC from a mediocre one, with product picks across budget and mid-tier categories.

What Actually Makes a DAC Good

The audiophile internet has strong opinions here, and they don’t always agree.

Measurements: The Foundation

A DAC’s primary job is to convert a digital signal to analog with as little added noise, distortion and error as possible. The metrics that matter most are THD+N (total harmonic distortion plus noise), SINAD (signal-to-noise-and-distortion ratio), dynamic range and IMD (intermodulation distortion). Audio Science Review publishes standardized measurements of hundreds of components, which gives apples-to-apples comparisons.

At the budget tier, modern delta-sigma DAC chips from ESS (the ES9038Q2M, ES9068AS) and AKM (the AK4493S, AK4499EX) are very good. The gap between a well-implemented budget DAC and a mid-tier DAC has narrowed considerably over the last five years, and “transparent” is achievable at budget price bands. What you’re mostly paying for as you move up is implementation quality, feature sets and, in some cases, deliberate sonic character.

Chip Architecture: Delta-Sigma vs. Multibit

Most modern DACs use delta-sigma architecture, which oversamples the digital signal and uses noise shaping to push quantization noise out of the audible frequency range. The result is typically excellent measurements and a neutral, transparent presentation. ESS and AKM chips dominate this space.

Multibit DACs (sometimes called “ladder DACs” or “R-2R DACs”) use a different approach: a resistor ladder network assigns a voltage to each bit directly. Proponents describe the result as having more “analog character” or better handling of transient detail. Schiit’s True Multibit architecture, used in their higher-tier products, is the most accessible example in the hobbyist market. Multibit DACs often measure less perfectly than delta-sigma implementations, but measurement performance isn’t the only valid priority.

Features That Affect Real-World Usability

Balanced versus unbalanced output is the feature people ask about most. XLR balanced outputs provide better noise rejection over longer cable runs and pair naturally with balanced amplifiers. For a desktop system where cable runs are measured in inches, the practical difference is modest. That said, if you’re planning a balanced amp, balanced DAC outputs matter for completing the signal chain correctly.

Input flexibility matters more than people expect. USB, optical (TosLink) and coaxial (S/PDIF) inputs give you flexibility across source devices. Optical is electrically isolated, which can help with ground-loop noise in some setups. USB is the standard for computer audio and supports the highest sample rates.

Remote control and display features aren’t audiophile priorities, but they’re real quality-of-life considerations if you’re running a desktop system and want volume control without reaching for hardware.

When Does a DAC Actually Make a Difference

For most modern headphones driven from a proper stack, the DAC matters less than the amplifier. The difference between a laptop’s built-in output and a dedicated DAC is audible in noise floor and clarity, but the difference between two competent dedicated DACs is much smaller.

Planar magnetic headphones are the main exception to keep in mind: they tend to be more sensitive to upstream source quality than standard dynamic drivers, so the source matters more there than it would for a typical dynamic headphone.

The bottom line: a competent, measurement-verified DAC at the budget tier eliminates the variable. Once you’re in “good” territory, you’re not chasing meaningful improvements by spending more on the DAC alone. Spend the rest on amplification or headphones.

Top Picks

Topping E50 HiFi Balanced DAC

The E50 uses the ESS ES9068AS chip with balanced XLR outputs, and published measurements show strong SINAD for a mid-tier unit. The balanced XLR outputs connect directly to the balanced inputs of an amp like the Topping L50, keeping the signal path balanced from end to end.

The E50 supports MQA, which enables Tidal Masters playback. MQA’s marketing claims deserve skepticism, and the neutral, transparent performance of the ES9068AS implementation is the actual value here. MQA is a feature that’s there if you want it, not a reason to buy or avoid the unit.

The one constraint to note: no headphone output. The E50 is a pure DAC and needs a separate amplifier, which is the right design choice for sound quality but adds cost and desk space. The original E50 has since been succeeded by the Topping E50 II.

Topping E30 II

The E30 II uses the AKM AK4493S chip, which delivers excellent noise and distortion performance at this tier.

The input selection (USB, coaxial and optical) gives you flexibility if you’re connecting multiple sources, and the compact form factor fits on any desk. The limitations are honest ones for the price tier: no balanced output, and no remote control. If you’re pairing it with a JDS Labs Atom Amp+ or a Schiit Magni, the RCA outputs are perfectly adequate. For budget desktop system builders, the E30 II is a sensible first step into dedicated DAC territory.

Check current price on Amazon.

TOPPING E70 Velvet

The TOPPING E70 Velvet uses the AKM AK4499EX, about as high-tier as a delta-sigma chip gets in the current market. It adds Bluetooth LDAC support and includes preamp functionality alongside balanced XLR and RCA outputs. That preamp feature means it can feed a power amplifier or powered speakers directly, which matters if you’re building a more versatile system.

The AK4499EX is a flagship chip, but the E50’s ES9068AS already clears the transparency threshold for most use cases. The E70 Velvet makes the most sense for buyers who specifically want the AK flagship chip or need Bluetooth LDAC for a mixed-source system. At the time of writing it is not available to buy on Amazon, so check back for stock.

Topping DX3 Pro+

The Topping DX3 Pro+ takes a different approach: it’s an all-in-one DAC and headphone amplifier in a single box. For buyers who want a simplified desktop setup without managing a separate DAC and amp, it’s a legitimate starting point.

The DX3 Pro+ uses the ES9038Q2M chip with Bluetooth LDAC support and a 6.35mm headphone output. It sits in the same budget all-in-one category as the FiiO K7 and K11, and suits easier-to-drive headphones.

High-impedance headphones like the Sennheiser HD600 (300 ohms) or planar magnetics with low sensitivity will push this unit toward its limits. For budget-friendly headphones in the 32 to 150 ohm range, it handles the job. If you use planars or high-impedance dynamics, separates are the better route.

Check current price on Amazon.

Schiit Modi 3+

The Schiit Modi 3+ is a budget desktop DAC with a distinguishing point: it’s built in the USA, which matters to a meaningful portion of buyers. USB, optical and coaxial inputs cover the common source connections. Paired with a Schiit Magni, it forms the classic Modi/Magni budget desktop stack.

The Modi 3+ is sold through Schiit’s own website rather than Amazon, so check Schiit directly for availability.

Schiit Modius E

The Schiit Modius E is where Schiit’s lineup steps up to balanced XLR outputs, which makes it the natural partner for balanced amplifiers like the Schiit Magnius.

Made in the USA, the Modius E is purpose-built for a clean signal path to a balanced amp rather than as a feature-rich all-rounder. Topping’s equivalents offer more preamp functionality for comparable spend. Like other Schiit products it is sold direct from Schiit rather than on Amazon.

Schiit Bifrost 2

The Schiit Bifrost 2 occupies a different category from everything else on this list. It’s Schiit’s flagship multibit DAC, using a True Multibit architecture rather than an off-the-shelf delta-sigma chip. That’s a meaningful distinction.

Multibit designs generally measure below the best delta-sigma DACs on SINAD, so if measurement performance is your primary criterion, the Bifrost 2 is not the answer. That is not a knock, just a description of what this DAC is. It is often paired with tube amplifiers and is field-upgradeable via Schiit’s card system. For tube system builders, or anyone who wants DAC character over DAC transparency, it is the one to consider. It is sold direct from Schiit.

JDS Labs Atom DAC+

The JDS Labs Atom DAC+ is the natural companion to the JDS Labs Atom Amp+, forming one of the best-known budget stacks in the hobby. JDS Labs builds in the USA.

The design philosophy is straightforward: do one thing well, pair with the Atom Amp+ for a complete system, and stay out of the way of the music. The Atom DAC+ is sold directly through JDS Labs at jdslabs.com and is not typically available through Amazon. If you prefer buying direct with manufacturer support, that’s an advantage; if Amazon availability is a requirement, it’s worth knowing upfront.

Buying Guide: How to Choose a DAC for Your Setup

Choosing a DAC is less complicated than the forums make it seem. A few clear questions will narrow the field faster than reading every review ever written.

Start With Your Amplifier and Signal Path

The single most important factor in DAC selection is matching your outputs to your amplifier’s inputs. If you’re running a balanced amplifier (XLR inputs), you want balanced XLR outputs from your DAC. If you’re running an unbalanced amplifier (RCA inputs), unbalanced RCA outputs are perfectly adequate. Buying a balanced DAC for an unbalanced amp doesn’t give you the balanced benefit.

For a compact desktop system with short cable runs, the practical performance difference between balanced and unbalanced is small. Plan your system as a whole, then choose the DAC that completes the chain correctly.

Measurements vs. Character: Two Valid Priorities

Delta-sigma DACs from Topping, JDS Labs and Schiit’s E-range lineup measure extremely well. If transparency and technical correctness are your goals, any of the measurement-optimized options in the DACs category will serve you. At the budget tier, the ES9038Q2M, AK4493S and ES9068AS chips all clear the transparency bar.

Multibit and R-2R DACs prioritize a different outcome. The Schiit Bifrost 2 is the accessible reference point here. Measurements are not the primary story; sonic character is. This approach makes the most sense for tube-based systems or for listeners who want a warmer, more textured presentation. Neither priority is wrong. They are different tools for different systems.

Input Flexibility and Source Devices

Think through your actual source devices before committing. A Mac mini or PC connects via USB, which is the standard and supports the highest sample rates. A TV or gaming console typically outputs via optical TosLink. A CD transport or older source component may use coaxial S/PDIF. Budget DACs with all three inputs give you the most flexibility for a mixed-source system.

Bluetooth LDAC support (available on units like the E70 Velvet and DX3 Pro+) is worth considering if you have a wireless source, like a phone or tablet, that you use regularly. It adds cost without improving wired performance, so weigh it against your actual use case.

All-in-One vs. Separates

The question of separates versus all-in-one comes up constantly for budget system builders. The short version: an all-in-one combo unit like the DX3 Pro+ simplifies setup and reduces cost. Dedicated separates (a standalone DAC paired with a standalone amplifier) give you better performance at equivalent combined spend and more upgrade flexibility over time.

For high-impedance headphones (250+ ohms) or planar magnetics with low sensitivity, separates are worth the added complexity. Combo units typically compromise on amplifier output power.

Budget Allocation Across Your System

At the budget tier, putting more money into your amplifier than your DAC is a reasonable strategy. Modern budget DACs are transparent enough that the DAC is rarely the limiting factor, while amplifier quality, output impedance and power delivery affect the sound at your headphones more directly.

Once you’re at the mid tier and above, the calculus shifts. An E50-class DAC paired with an L50-class amp is the kind of system where the DAC and amp are matched components, neither bottlenecking the other. The wider DAC landscape also includes desktop units with preamp functionality, which becomes relevant if you’re adding powered monitors to your setup.