A city of canals, like Venice or Amsterdam, might seem a good guess, but the word, were, in the question clearly reveals that "paved" is meant literally, not figuratively. Noting that, it becomes clear that the question is an allusion to the American-authored novel, Hans Brinker; or, the Silver Skates: A Story of Life in Holland.
So it is was Holland--today, The Netherlands--where, as the story goes, time was when canal "streets" were paved with water (ice).
The streets paved with water refer to the Floating Markets of Thailand, particularly Damnoen Saduak. Here, vendors sell goods from boats, creating a unique shopping experience on the water.
Venice, Italy.
Streets paved with water do not exist. The phrase "streets paved with water" is often used poetically or metaphorically to describe a place where it constantly rains or where water features are prominent.
In Rome, the world's first paved streets were laid out in 170 B.C. The new streets were popular, as they were functional in all types of weather and were easy to keep clean, but they amplified the city's noise level.
William Penn
Many of the streets of Rome were alleys as the city was crowded. The main streets were either gravelled of stone-paved.
it is smoother than cobblestones.
That's almost it. "City Where the Streets are Paved with Gold". It's based on Revelation 21:21: "The great street of the city was of gold, as pure as transparent glass." So, as you see, the Bible doesn't say, "paved" (or streets either -- it's one street).
Dick Whittington went to London because he believed the streets were paved with gold.
William Penn
Felony Squad - 1966 The Streets Are Paved with Quicksand 1-1 was released on: USA: 12 September 1966
Luxembourg is a well developed country, so it basiclly has paved roads everywhere. I'd say 99,99% of Luxembourg's streets have paved roads.
WEST VIRGINIA ... Had the first brick paved street in the United States. Summers Street, laid in Charleston in 1870 but, not The first brick road in the world. Brick paved streets were used in India as early as 3000 BC