Crypto treasury company ETHZilla (ETHZ) has made a strategic move into the credit onchain space by acquiring a fully diluted 20% stake in auto finance and AI startup Karus.
The $10 million deal includes $3 million in cash and $7 million in ETHZilla shares, and will allow the company to integrate Karus’ underwriting AI models into its blockchain stack to issue tokenized car loan wallets.
According to Wednesday advertisementKarus’s decision engine has been trained on over 20 million historical auto loan outcomes and has evaluated over $5 billion in loans at origination, giving ETHZilla a pre-designed dataset for structuring AI-segmented pools with onchain settlement. The first token wallets are scheduled to be released in early 2026.
Karus’ network of auto dealers, banks and credit unions gives ETHZilla a large pool of potential loan portfolios for future securitization. ETHZilla estimates that every $100 million deployed in Karus model tokens could generate $9 million to $12 million in adjusted EBITDA — a measure of operating profit before interest, taxes, depreciation, and amortization.
Under the agreement, ETHZilla will hold a seat on Karus’s board of directors and will receive certain governance rights. Karus’ backers include lead investor Stage Global Partners, as well as Tacoma Venture Fund and Capital Eleven.
Auto loans make up a large segment of the U.S. asset-backed securities market, which had nearly $1.6 trillion outstanding as of December 2024, according to second Data.
John Kristof, head of investor relations at ETHZilla, told Cointelegraph that the acquisition provides access to loan exposures previously limited to large institutional investment firms involved in complex securitization structures.
“By offering auto loans on-chain, we are able to open these high-quality, income-generating assets to a global investor base for the first time.”
ETZilla is currently the sixth largest Ether treasury, with 94,030 Ether (Ethereum) on its balance sheet, according to CoinGecko Data.
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Tokenized fixed income products will rise in 2025
Token debt markets will accelerate in 2025, with institutions increasingly using blockchain to issue and trade fixed income products.
US Treasuries and tokenized private credit, which brings government debt and corporate loans on-chain, have become two of the largest segments of the emerging tokenized debt market.
According to RWA.xyz DataToken Treasury bonds grew to $9.21 billion, more than tripling from $2.68 billion the previous year.
This shift has been driven by major asset managers, with BlackRock’s BUIDL Fund It currently holds about $2.3 billion in Treasury securities and… Franklin Templeton The US government fund holds about $827 million.
The format dominates the tokenized private credit market, which accounts for $13.98 billion of the sector’s $19.02 billion market capitalization.
Blockchain based lender It debuted on the Nasdaq On September 11 after that Raising its list price Several times with high demand for IPO.
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