You're right it's a trade off.
More transparency/auditability means less anonymity/privacy and vice versa all things equal.
The market is a continuous discovery process. Monero adoption on darknet markets is massively growing over time. White markets are less relevant for the whole point of crypto imo. I also don't think Monero needs to be #1 to be useful in it's niche. Can easily see both existing in the future in their own domains.
https://github.com/libbitcoin/libbitcoin-system/wiki/Permissionless-Principle