ETHZilla Enters Onchain Credit, Acquires Stake in Auto-Finance AI Startup

ETHZilla Invests in Karus to Tokenize Auto Loans

Crypto treasury company ETHZilla (ETHZ) has strategically entered the onchain credit market by acquiring a 20% fully diluted stake in Karus, an automotive-finance AI startup.

The $10 million deal, consisting of $3 million in cash and $7 million in ETHZilla stock, will enable the company to integrate Karus’s underwriting AI models into its blockchain stack. This integration will facilitate the issuance of tokenized auto-loan portfolios. Karus’s decisioning engine, according to Wednesday’s announcement, is trained on over 20 million historical auto-loan outcomes and has assessed over $5 billion in loans at origination. This provides ETHZilla with a pre-modeled data set for structuring AI-segmented pools with onchain settlement. The initial tokenized portfolios are scheduled for release in early 2026.

Karus’s network, which includes car dealers, banks, and credit unions, gives ETHZilla a significant pipeline of potential loan portfolios for future onchain securitization. ETHZilla estimates that every $100 million deployed into Karus-modeled tokens could generate $9 to $12 million in adjusted EBITDA.

As part of the agreement, ETHZilla will gain a seat on Karus’s board and certain governance rights. Karus’s backers include lead investor Stage Global Partners, along with Tacoma Venture Fund and Capital Eleven.

Automotive loans represent a substantial portion of the US asset-backed securities market, with approximately $1.6 trillion outstanding as of December 2024, according to SEC data.

John Kristoff, head of investor relations at ETHZilla, explained to Cointelegraph that the acquisition provides access to loan exposures previously limited to large institutional investment firms involved in complex securitization structures.

He stated, "By bringing auto loans onchain, we can open up these high-quality, income-generating assets to a global base of investors for the first time." Currently, ETHZilla ranks as the sixth-largest Ether treasury company, holding 94,030 Ether (ETH) on its balance sheet, according to CoinGecko data.

The Rise of Tokenized Fixed Income

The tokenized debt markets have seen rapid growth in 2025, with institutions increasingly using blockchain rails for issuing and trading fixed-income products. Tokenized US Treasuries and tokenized private credit, which bring government debt and corporate loans onchain, have emerged as prominent segments within the tokenized-debt market.

According to RWA.xyz data, tokenized Treasuries have expanded to $9.21 billion, more than tripling from $2.68 billion a year prior. This growth has been spurred by major asset managers, with BlackRock’s BUIDL fund holding approximately $2.3 billion in tokenized Treasuries and Franklin Templeton’s US Government Money Fund holding around $827 million.

Figure dominates the tokenized private credit market, accounting for $13.98 billion of the sector’s $19.02 billion market capitalization. The blockchain-based lender debuted on the Nasdaq on September 11, after increasing its list price multiple times due to high IPO demand.