Both analog-to-digital converters (ADCs) and digital-to-analog converters (DACs) can employ delta-sigma modulation.
A sigma-delta ADC first encodes an analog signal using delta-sigma modulation and then applies a digital filter to form a higher-resolution digital output.
On the other hand, a sigma-delta DAC encodes a high-resolution digital input signal into a lower-resolution signal that is mapped to voltages and then smoothed with an analog filter.
In both cases, the temporary use of a lower-resolution signal simplifies circuit design and improves efficiency.
Delta-sigma (ΔΣ; or sigma-delta, ΣΔ) modulation is a method for encoding analog signals into digital signals or higher-resolution digital signals into lower-resolution digital signals.