In theory this is achievable--a decentralised crypto city-state but the cost is heavy and almost unattainable in our current terrain, but that's the prize to pay for freedom at this point. So it begs the question is: are the people ready? It is certainly going to be a game of numbers and if there are not enough foot soldiers (believers) to fight and protect their sovereignty then we will never get to the level where crypto is equal or above the law(government).
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What will be truly interesting which is something I never seem to talk about are the tendrils of such a community reaching out into legacy cities. So many community members will be outside the city-state walls in regular towns and such. This makes the community as a whole much harder to attack as well... in fact it makes the military force allocated to domination at risk of being surrounded on all sides in the craziest of scenarios.