The Yggdrasil is a budget DAC. Upgrading will make a huge improvement in sound. The real question is in which direction do you want to upgrade? Do you want incredible detail? Or detail and musicality. Look at Berkeley and dCS for detail. ARC is detailed and incredibly musical. There are a lot of great DACs on the market today. In general, the greater the investment the greater the performance (of main stream DACs). I would recommend US and European before less expensive DACs. Typically these are great sounding on several dimensions, but miss on a couple.
Do not consider new interconnect types in your decision. The big deal is the component. AES is likely what you will use… but it is the component that is the determinant of the sound… the best connection is secondary or tertiary.