ETHZilla (ETHZ), a crypto treasury firm, has made a strategic move into onchain credit by acquiring a 20% fully diluted stake in automotive-finance AI startup Karus.
The $10 million deal includes $3 million in cash and $7 million in ETHZilla stock, enabling the integration of Karus’s AI underwriting models into its blockchain infrastructure for issuing tokenized auto-loan portfolios.
According to Wednesday’s announcement, Karus’s decisioning engine is trained on over 20 million historical auto-loan outcomes and has assessed more than $5 billion in originating loans, providing ETHZilla with a pre-modeled dataset to create AI-segmented pools with onchain settlement. The first tokenized portfolios are expected in early 2026.
Karus’s network of car dealerships, banks, and credit unions offers ETHZilla a substantial pipeline of potential loan portfolios for future onchain securitization. ETHZilla estimates that every $100 million allocated into Karus-modeled tokens could generate $9 to $12 million in adjusted EBITDA, a measure of operating profit before interest, taxes, depreciation, and amortization.
Under the agreement, ETHZilla will secure a position on Karus’s board and gain certain governance rights. Karus’s investors include lead investor Stage Global Partners, along with Tacoma Venture Fund and Capital Eleven.
Automotive loans represent a significant portion of the US asset-backed securities market, which had about $1.6 trillion outstanding as of December 2024, per SEC data.
John Kristoff, head of investor relations at ETHZilla, told Cointelegraph that this acquisition provides access to loan exposures previously restricted to large institutional investment firms engaged in complex securitization structures.
“By bringing auto loans onchain, we are able to open up these high-quality, income-generating assets to a global base of investors for the first time.”
ETHZilla is currently ranked as the sixth-largest Ether treasury company, holding 94,030 Ether (ETH) on its balance sheet, according to CoinGecko data.
Related: Ethereum treasury demand collapses: Will it delay ETH’s recovery to $4K?
Tokenized fixed-income products surge in 2025
Tokenized debt markets have accelerated in 2025, with institutions increasingly utilizing blockchain processes to issue and trade fixed-income products.
Tokenized US Treasurys and tokenized private credit, which bring government debt and corporate loans onchain, have emerged as two of the largest segments of the new tokenized-debt market.
According to RWA.xyz data, tokenized Treasurys have increased to $9.21 billion, more than tripling from $2.68 billion a year ago.
The trend has been propelled by major asset managers, with BlackRock’s BUIDL fund currently holding around $2.3 billion in tokenized Treasurys and Franklin Templeton’s US Government Money Fund holding approximately $827 million.
The tokenized private credit market is largely led by Figure, which accounts for $13.98 billion of the sector’s $19.02 billion market cap.
The blockchain-based lender made its Nasdaq debut on Sept. 11 after repeatedly raising its list price due to soaring demand for its IPO.
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