Here is the basic block diagram for the system, with one channel only shown.  The volume control is digital – onboard the DAC chip (most likely the newer ESS Sabre 32bit Reference).  I have been very reticent to use digital attenuation due to the well known problems with bit decimation and my own subjective experiences.  My preferred solution is to use transformer attenuation with 6-10dB taps, and then use digital attenuation for fine adjustment – this method has several advantages using a well designed transformer: it keeps the bit rate high, it acts a low/high pass filter (allowing non-oversampling typologies if desired), can be used as a phase splitter (the larger gain taps allowing tighter design) and crucially outputs more current into lower settings – subjectively increasing jump and resolution during quiet listening.

However, the issues of expense, size and particulary, installation raise their heads when using in a smaller package.  Having a large, heavy, hand wired object in a “mass produced” object is contentious and could led to reliability >> warranty issues.

I have been thinking about this for a long time, unable to see a way out that is consonant with my design targets, but reading Srajan Ebaen review the Wyred DAC2 in sixmoons.com has finally swayed me towards a simpler digital attenuation using the same DAC chip in a similar configuration.