Crypto treasury firm ETHZilla (ETHZ) has strategically entered onchain credit through its acquisition of a 20% fully diluted stake in automotive-finance AI startup Karus.
The $10 million agreement consists of $3 million in cash and $7 million in ETHZilla stock, enabling the integration of Karus’s underwriting AI models into its blockchain framework for issuing tokenized auto-loan portfolios.
According to Wednesday’s announcement, Karus’s decisioning engine has been trained on over 20 million historical auto-loan outcomes and has assessed loans exceeding $5 billion at origination, providing ETHZilla with a pre-modeled dataset to structure AI-segmented pools with onchain settlement. The initial tokenized portfolios are expected by early 2026.
Karus’s network of car dealers, banks, and credit unions offers ETHZilla a substantial pipeline of prospective loan portfolios for future onchain securitization. ETHZilla anticipates that every $100 million invested in Karus-modeled tokens could yield $9 to $12 million in adjusted EBITDA — a measure of operational profit before interest, taxes, depreciation, and amortization.
Under the agreement, ETHZilla will join Karus’s board and acquire certain governance rights. Karus’s backers include lead investor Stage Global Partners, along with Tacoma Venture Fund and Capital Eleven.
Automotive loans account for a significant share of the US asset-backed securities market, which stood at approximately $1.6 trillion outstanding as of December 2024, per SEC data.
John Kristoff, head of investor relations at ETHZilla, told Cointelegraph that the acquisition grants access to loan exposures that were previously exclusive 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 currently ranks as the sixth-largest Ether treasury firm, holding 94,030 Ether (ETH) on its balance sheet, as per 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 experienced rapid growth in 2025, as institutions increasingly leverage blockchain technology to issue and trade fixed-income products.
Tokenized US Treasurys and private credit, which bring government debt and corporate loans onchain, have emerged as two of the largest sectors within the burgeoning tokenized-debt market.
According to RWA.xyz data, tokenized Treasurys have surged to $9.21 billion, more than tripling from $2.68 billion a year prior.
This change 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 possessing roughly $827 million.
The private credit sector has been predominantly led by Figure, which comprises $13.98 billion of the total $19.02 billion market cap in this category.
The blockchain-based lender made its debut on the Nasdaq on Sept. 11 after raising its listing price multiple times due to high demand for its IPO.
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