Bluesound Node2 with outboard DAC

Simple answer, an expensive DAC will improve it but it will hold it back.  The internal DAC is pretty good.  Against my Emotiva XDA DAC and my Rotel RC-1572 preamp's DAC it was better.  Not much, but slightly more open sounding.  When I hooked up it to my McIntosh C47's internal dac there was a major upgrade in sound quality, but it was still compressed sounding on the top end.  

Like mrklas, I got a Moon 280d.  It's a amazing DAC but didn't help the sound much.  Got more detail over my C47's DAC, but the Node 2i was still compressed sounding.  Now streaming with the 280d was no comparison.  More dynamic, more detail, better imaging, bigger sound stage, and just about every aspect was a major upgrade.  The only downside about the 280d is that you need to use the horrible app to stream tidal (no tidal connect) and even Spotify connect is rather buggy.  Roon works perfectly fine on both platforms.  Basically you're trading ease of use for far superior SQ.  

If you're looking to drop 3-3.5k then grab the 280d and don't look back.  The Lumin D2 is a bit cheaper, better app but is a streamer only with a bit warmer, less detailed sound.  Equally as good but you lose the DAC.  

I bypass the dacs in the streamers I own. I have Aurrender n100,BS node and Cambridge Audio Cxn v2. In my main system I use the CA hooked to an Audio GD 7r he mk2. Can't tell any difference between streamers but the dacs are night and day difference. 

I auditioned two DACs with my Bluesound Node 2. The Border Patrol DAC and the Mhdt Labs Orchid, Both presented a marked improvement over the onboard DAC in the Bluesound, After a couple days of A/B listening I gravitated to and purchased the Border Patrol. To my ears it has a more enveloping and analog sonic quality,  closer to vinyl which I listen to around 90% of the time. No idea how it would compare to a DAC costing two to three times more, but it works very well in my system. I like the Bluesound interface and since it supports Tidal I find I am all set...at least for a while.

Hey OP,

I use an external DAC with my Bluesound Node 2i. I use the Node for streaming and the Schiit Bifrost 2 as my DAC. I think it sounds wonderful. I have mine hardwired with ethernet. I also upgraded the power cable to a Shunyata Venom and the S/PIDF to a Shunyata Venom. 🤌🤌🤌 
Video Of All Of It In Action

Buy better separates , unless spending at least $6 -7 k for a streamer,-dac . I don’t see how it can be up to the task , you need linear power supplies  Roon server is ok at best  having a separate dac you can continue to get better with technologies  or budget ,all In one very limited in brand choices dac- streamers.