And with digest auth, the server must have the plain text password already. But sure, maybe there is a third option.
Well, the most common such protocol is TOTP, which still requires the server to store your full password. In that sense it's worse than a naive password exchange, which only requires the server to store your hashed password.
There are other password protocols that require neither transmission nor server retention of the full password, but it seems worth noting that the protocol we actually have didn't bother with that.
I'm not sure what you want to ask.
The problem with TLS client certs, of course, is the fact you need a method of signing CSR's, and the terrible UX modern browsers have for client auth, especially on mobile.