Seeking DAC Advice for a Secondary Two Channel System

I have a secondary two channel audio system in my home office consisting of an NAD 326BEE integrated amp, Dynaudio Excite X14 speakers and a single REL T5x subwoofer.  While I also have a Rega RP3 turntable and an NAD CD player, I mainly just use this as a digital system.  I use Roon with an Innuos Mk.3 as my Roon Core and a Bluesound Node 2i as a streamer/endpoint.  When streaming I use Tidal and Quobuz.  Occasionally I stream with Spotify which I do directly from the Bluos app because of the lack of compatibility with Roon.  Music preferences are rock, Americana, folk, soul/R&B and some electronic music.

I want to see if I can upgrade the sound and am operating under the assumption that the Node is my weakest link.  It has been suggested to me that one option would be to buy an external DAC and bypass the DAC imbedded in the Node. Alternatively I could replace the Node altogether.  I think my budget is around $500 but I don't know what I don't know.  I would also hope whatever piece of equipment I buy is somewhat small in size.  I don't have a lot of room on my rack to spare.

I would greatly appreciate any thoughts/suggestions this board might have on this quest.

Thanks in advance.

@puppyt