ETHZilla Acquires Stake in Karus to Tokenize Auto-Loan Portfolios Powered by AI

Crypto treasury firm ETHZilla has taken a key step into the on-chain credit space by acquiring a 20% fully diluted stake in Karus, an AI-driven automotive finance startup. This $10 million investment, consisting of $3 million in cash and $7 million in ETHZilla stock, will facilitate the integration of Karus’s AI underwriting technology into ETHZilla’s blockchain system, paving the way for the issuance of tokenized auto-loan portfolios.

Key Takeaways

ETHZilla has secured a 20% equity stake in Karus for $10 million.
The deal combines $3 million in cash with $7 million in ETHZilla stock.
Karus’s AI models enhance underwriting for a better assessment of auto loans.
The first tokenized portfolios are expected to launch in early 2026.
ETHZilla now has access to a significant loan pipeline through Karus’s partnerships.

ETHZilla takes stake in Karus to tokenize AI-modeled auto-loan portfolios

Main Content

Crypto treasury company ETHZilla (ETHZ) has made a strategic move into the on-chain credit landscape with its acquisition of a 20% fully diluted stake in Karus, a startup focused on AI-driven automotive finance. The investment, valued at $10 million, includes $3 million in cash and $7 million in ETHZilla stock. This partnership will enable ETHZilla to incorporate Karus’s advanced AI underwriting models into its blockchain framework, allowing the issuance of tokenized auto-loan portfolios.

In a recent announcement, it was noted that Karus's decision-making engine has been trained on over 20 million historical auto-loan outcomes and has scrutinized loans amounting to over $5 billion. This rich dataset offers ETHZilla the ability to create AI-segmented pools with on-chain settlement, with the first tokenized portfolios scheduled to roll out in early 2026.

Karus’s connections with a wide network of car dealers, banks, and credit unions present ETHZilla with numerous opportunities for on-chain securitization of loan portfolios in the future. ETHZilla anticipates that for every $100 million invested in Karus-modeled tokens, it could yield approximately $9 to $12 million in adjusted EBITDA—this metric indicates operating profit before accounting for interest, taxes, depreciation, and amortization.

Under the terms of this agreement, ETHZilla will gain a seat on Karus's board, along with specific governance rights. Prominent investors in Karus include Stage Global Partners, Tacoma Venture Fund, and Capital Eleven.

Automotive loans are a crucial part of the U.S. asset-backed securities market, which was recorded at about $1.6 trillion outstanding as of December 2024, according to data from the SEC. John Kristoff, head of investor relations at ETHZilla, remarked to Cointelegraph that this acquisition grants ETHZilla access to loan exposures that were primarily available to large institutional investors engaged in complex securitization processes.

Currently, ETHZilla is recognized as the sixth-largest Ether treasury company, holding 94,030 Ether on its balance sheet, as reported by CoinGecko.

BlackRock, Tokenization, RWA Tokenization Top Ethereum treasury companies. Source:Coingecko _Related:_Ethereum treasury demand collapses: Will it delay ETH’s recovery to $4K?

Surge in Tokenized Fixed-Income Products in 2025

The market for tokenized debt has seen substantial growth in 2025, as more institutions are leveraging blockchain technology to issue and trade fixed-income products. Tokenized U.S. Treasuries and tokenized private credit have emerged as two of the leading segments in this developing tokenized-debt arena.

BlackRock, Tokenization, RWA Tokenization _Tokenized Treasurys. Source:_RWA.xyz

According to data from RWA.xyz, tokenized Treasuries have surged to $9.21 billion, marking a significant increase from $2.68 billion just a year ago. This shift has largely been driven by major asset management firms, with BlackRock’s BUIDL fund currently holding approximately $2.3 billion in tokenized Treasuries, while Franklin Templeton’s U.S. Government Money Fund boasts around $827 million.

The tokenized private credit market has been primarily led by Figure, which owns about $13.98 billion of the total $19.02 billion market cap of this sector.

BlackRock, Tokenization, RWA Tokenization _Tokenized Private Credit Volume. Source:_RWA.xyz

Figure made its debut on the Nasdaq on September 11 after adjusting its listing price multiple times due to high demand for its IPO.

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