I went through the same experience. I added a Project DAC to my Node 2i and it actually sounded thin. The DAC inside the Node 2i actually sounded better. However, I was upgrading my speaker cables and power cords and the sales person from The Cable Company thought we should add a power cable to the node 2i and connect it using digital cable to my ARCAM AVR 550. He told me a $550 BlueSound can't have the quality of DAC as compared to using the DAC in my ARCAM. I told him I was not anxious to give up MQA Tidal offers and he said going digital will sound better. He also told me MQA is way over rated and was perhaps just a marketing tool to attract audiophiles to Tidal. I am still not sure I hear much of a difference. However, I have been using a digital connection for months now and have not done another AB comparison.
I would also imagine the Project DAC at its price point may not have been the right choice. Seems like most DAC's start at $1,500. I wonder if I were to use a better external DAC if I would be able to hear an improvement in sound quality. Adding a pair of Synergistic Research Level One Atmosphere speaker cable was probably the biggest upgrade. I now can hear greater detail in the higher frequencies. Perhaps adding a Luxman 509 amp might also be the next step to upgrading quality for 2 channel listening. I have a source where I can purchase the Luxman for $7,000 compared to full retail of $10,000.