Question on how DAC’s work...


Hello all!

In my system, my digital sources are a Denon DVD-2900 disc player (CD/DVD-Audio/SACD) & a Bluesound Vault 2. Most of my listening these days is done with the Vault 2 streaming Tidal, especially the growing catalog of MQA offerings. 

My first question is, if I were to start using an external DAC, and that DAC does not have MQA compatibility, would I still be getting the potential of “better sound” from the external DAC even though the Vault is doing all the unfolding?

My second question is if my disc player exports SACD at a different bit-rate than what the DAC is capable of, will the DAC upscale or alter the bit-rate to get better performance?

Sorry if these are rudimentary questions, but the only DAC I’ve purchased to this point is a Meridian Explorer 2 that I’m using in a PC audio setup & was pretty much plug & play. 

Thanks for any help...Hope you’re all doing well!

Arvin
128x128arvincastro
Thanks, @mahler123...I completely forgot to confirm about the digital outputs on the Denon. In my haste, I thought it had a coax among all the other outputs back there!

Arvin
The denon DVD 2900, at least the US version, has digital coax and optical outputs. Only the 44.1/16 layer of a hybrid SACD will play out. The DSD bitstream of a DVD video will pass to an AV processor on the digital out. 
I have a node 2i feeding into a benchmark DAC2 HGC. I don't notice much a difference on MQA tracks anymore. As others have stated, the node does the first unfold into the DAC. The MQA tracks seemed more impressive when I streamed straight from the node but with the DAC everything just sounds great.
The way I understand things is if you attach an external DAC to a Bluesound Node 2i via digital COAX, you only get 1/10 the unfold of MQA.  Is there a better streamer than a Bluesound that can completely unfold MQA?  If so, which steamers sound significantly better than a Bluesound?  Love to witness a blind testing and then say was that two times better, three times better.

i certainly like my Bluesound Node 2i played by itself than when I added a ProJect S2 DAC.  I think MQA sounds incredible.  Wish I could flip a switch and compare with and without adding an external DAC.  If this Corona Virus gets any worse we won’t be around anyway.