I have the Reference 7 , the R1 and the Denafrips Ares . I wanted to do a head to head comparison before answering you . I have been mostly listening to the R1 in recent weeks as the latest firmware updates have really transformed it . Well I also have the Reference 7 on my desk although it doesn't get much use as my amp a few other things are stacked on it . The Denafrips also hasn't got much use as it's spent most of it's life in the box ( I got it the same time as the R1) but it's now in the living room replacing my old DAC19 which I just sold . I am feeding all the dacs from my PC's USB via COAX ( Gustard U16 converter ) with good cables and I am playing CD's through Speakers . First the R1 , it's very clear and distinct , it's now set on Oversampling X8 , it has a nice clear sound , I like it , it's easy to listen to ( not fatiguing ) Then my old friend the Reference 7 , compared to the R1 it is a bit more laid back and has a slightly sweeter sound but it no longer sounds better than the R1 , but I think it's needs to be wormed up . . The Denafrips doesn't have many hours on it , but I can tell you as I started to listen I could immediately hear a difference , I was a bit surprised as it had a richer more pronounced sound than the other two , I am really surprised as I thought that there wouldn't be much of a difference , but it sounds really good , it's clear , distinct and has a rich pronounced sound . so far it's definitely the winner . I think I'll leave it on my desk for a while , I had forgotten just how good this little guy is . I also have a DAC 19 V7 and a NFB 11.38 so I am a believer in Audio gd products The R1 is also very good and mine isn't the very latest so with the latest upgrades it should be even better , it's also very adjustable NOS or OS from the front panel and there is Mr Kingwa who is always there to help me whenever I have a problem . I hope this helps you to be able to make a decision , both dacs are really very good but the Denafrips has a richer sound while the R1 is easier to listen to and is more adjustable and offers future upgradability and it's also an Audio gd . And now that the Reference 7 has wormed up it's sounding much better and I think that it will now give the Denafrips a good run . I really love my PCM1704 dacs they are so musical and I intend to keep them . But if you have to down size either the Denafrips or the R1 will be a good replacement , but for sound quality I have to give the nod to the Denafrips . But it's a pity that you have to part with the Reference 7 it's a classic , such a beautiful dac .