Multi-bit Sigma Delta modulators suffer from the DAC non-linearity problem and often need complicated Dynamic Element Matching (DEM) circuits. Combining a multi-bit quantizer and a single-bit DAC eliminates the need of DEM circuits, simplifies the design, and reduces the power consumption. Using a digital circuit to compensate the truncation error caused by cutting the multi-bit feedback to single-bit, the structure can achieve the same noise transfer function as a conventional multi-bit modulator. One drawback is that the signal scaling in such a structure lowers the overall resolution. In this paper the influence of signal scaling is analyzed and a design example given. A second order 3-bit modulator is fabricated in 0.35 m CMOS process, achieving 82 dB dynamic range at OSR = 128 and a peak SNDR of 73.1 dB.