Upgrade PS Audio DSD Mk1 to?

I only recommend gear that I have actually owned, heard in my system or in a friends system I am familiar with.  With that in mind and if you appreciate the sound of the DSD Mk I, which I have also owned, I would recommend new and under your price limit the Holo Spring 3 KTE or the Laiv Harmony. Both are somewhat similar but the Holo is a bit more "lively." For a FPGA based DAC like the DSD but far more advanced I would recommend finding a used Aqua La Scala Mk II.  While it has been recently been replaced by the Mk III, which I own, it is modular and if in the future you wanted to upgrade it to Mk III status you could. You can generally find them used for a bit over $4k.

Hi again @tko956 , I used to think that which chip was important, but I really think it is the implementation of the chip that makes the final sound.  My fav is the MM Tambaqui, showing up used now for under 8k, a bit over budget but world renowned.  It's resolution would blow you away, not hurt your ears!  I believe the Tambaqui is not quite R2R, Delta Sigma or chip based but proprietary and unique.

While buying with a return option is ideal, buying a quality piece at a good price is generally easy to resell if you want, and then no pressure to decide in 15 or 30 days.  So many good options though!

The PSA dac was on my list but I went with the Venus 15 instead, which is generally equivalent to last years terminator.  The Mk2 has great reviews.  I have been very pleased with the sound and build quality ov the Venus.  I appreciate the option to switch between NOS and OS modes.  I don't find it to 'sound digital' and the highs are smooth.   There are lots of good options for DACs now.  Some of the dacs I looked at measured pooly, and while not the only thing that matters,  it is often reflected in the sound.  

Great responses so far, thanks.

@thriftyaudio I have been looking at the Bricasti DACs with some interest.

@soix The trial period is definitely an advantage.  I noticed an Aero at TMR with upgraded tubes.  Of course it will probably be gone now.  Denafrips has always interested me but for some reason they simply put me off.

@jackd "I only recommend gear that I have actually owned, heard in my system or in a friends system I am familiar with." Thank you for that!  I'll look more into the Aqua DAC.

@fastfreight You've got a point... The implementation and output stage probably play a rather large part if how any chip DAC sounds.  I'm very happy with my Ayre preamp so I'll look more into the DAC.

@12many Thanks for the Denafrips vote!

I appreciate the suggestions so far and am always looking for more info.

Thanks!

I just moved from the Qutest to the Bricasti M3. It is not R2R, but it is slightly calmer than my Qutest & I find it to be outstanding in every way. Not warm, but accurate without being harsh. I love it. Potentially worth a look.