Weak Link in chain as I upgrade from mid-fi?

There are some parallels to where you’re starting from and where I started. I used an Arcam AV40 and PA240, both of which I still have. It was good for what it is and both still remain although the AV40 is purely for AVR duties.

I now have a fully separate 2 channel system and there is no comparison with the Arcam. Lumin U1 -> Denafrips Terminator Plus dac -> Pass Labs XP22 -> PA240 -> Focal Kanta 3s. It's my first foray into 'hi-fi' and I'm glad I've upgraded piece by piece because you learn a lot about how every item in the chain matters. 

Just adding the XP22 alone was night and day over the Arcam as a pre-amplifier, not to mention the other components that replaced the AV40 on the streamer/dac side. But it all comes at significantly higher cost so it’s all relative. The amp is the last item in the chain I will be upgrading.

@zander024 Here's my journey, which is all over the place until I got serious about a two channel system. I unfortunately don't have any dealers of anything local that seem willing to allow at home demos (I did in store demos when possible) so I've relied on countless hours of research. My biggest tip is to decide on what kind of sound you like and what you're ideally seeking as an end result.

1. Denon AVR, two Klipsch subs, and old KEF Q75 towers. 

2. Denon AVR, PA240, old KEF Q75 towers.

3. Denon AVR, PA240, KEF R5.

4. Arcam AV40, PA240, KEF R5, added Bluesound Node 130 and shortly after did the PD Creative power supply mod.

5. Same as 4, but added Denafrips Venus 2. Major improvement but hampered by the AV40 since there's no way to eliminate everything going through the internal DACs.

6. Pass Labs XP22 added, Arcam goes through the XP22 pass-thru function. First separate venture which made a tremendous difference, Bluesound and Venus now are routed into XP22 which then goes to the PA240.

7. Same as 6 but added Focal Kanta 3s, again massive improvement.

8. Same as 7 but added the Terminator Plus because I was already familiar with Denafrips and wanted more of that. It's an excellent, balanced DAC, detailed yet smooth, huge soundstage, great separation.

9. Added Lumin U1, along with the X1 upgraded power supply. BIG improvement over the Bluesound, night and day.

That's a wrap. My final upgrade will be the PA240 amp, which is actually a good pairing with everything but is by far the weakest link in the setup.

@soix You guessed it. I'm pretty focused in on either the X250.8, x350.8 (or the X260.8 monos but I would need to redo the house electrical side). Others I'm considering are Parasound JC5, Coda 8, or similar. Can drive oneself crazy hyper analyzing all the options. And I'm always jealous of those who have dealers willing to allow at home demos. Those don't seem to exist in my area.

The Kanta 3 are a very dynamic speaker already (which is why I chose them over the Sopras and others). So based on all I've seen and heard from other owners, Pass amps are a great synergy since it'll add some warmth and bass extension (lower dampening factor will pair well with the fast Kantas) while still providing a good level of detail. I don't like overly warm, but do love soundstage depth and detail. 

@zander024 Forgot one step, which made a massive difference in my setup. Room treatment.

10. Added an area rug, GIK Acoustics 244 Bass Trap with FlexRange (absorption) for points of first reflection, Soffit and Tri-Trap bass traps to tame bass modes, have two freestanding 6A Alpha Pro Series Bass Trap Diffusor/Absorbers behind my listening position and two on the front wall behind the speakers.

The difference in the room with and without even basic treatment is night and day. Don't discount treatment even if it's minimal. My listening room is also the living room. It's kept the room lively while taming all the major issues.