DACs oh my!

Hello everyone!

I wanted to pick the brains of some of the experienced audiophiles here and see if anyone could give me some guidance. I’ve worked in the industry in the past for about 15 years, but focused more on things like speaker placement, wiring, programming, and not so much on the analog club and hifi streaming. Now, I finally have the opportunity to get a little into it but I’ve emptied the wallet doing so and don’t have much to spend to fix the weak link.

I have a pair of Martin Logan ESL X on their way.. my dream speakers. I’ll be powering them with my Pre-existing Denon 4520Ci. I know it’s not the most ideal choice, but it’s not a bad receiver either. The weak link is that my source content (Tidal) will be getting streamed through a Sonos Connect via the analog output, and from my understanding, the analog output sucks on the Sonos Connect.

I would assume, being a good receiver, that the optical ports on it would have a good built in DAC and I could simply feed optical to the receiver and not worry about the analog ports on the Sonos (the only drawback being that I couldn’t feed a zone 2 with the receiver anything from the optical side). Would this suffice to give me good sound quality, or do I really need a good DAC to get the nice quality? From my understanding, Sonos only supports 16 bit from Tidal atm anyways, so I can’t get Master Quality, even if the receiver supports it.