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

The deal grants ETHZilla access to Karuss AI underwriting engine and loan origination network, positioning the crypto treasury company to offer auto credit onchain in 2026.

Crypto treasury company ETHZilla (ETHZ) has taken a strategic step into onchain credit with the acquisition of 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, and will allow the company to integrate Karuss underwriting AI models into its blockchain stack to issue tokenized auto-loan portfolios.

According to Wednesday‘s announcement, Karus’s decisioning engine is trained on more than 20 million historical auto-loan outcomes and has evaluated over $5 billion in loans at origination, giving ETHZilla a pre-modeled data set to structure AI-segmented pools with onchain settlement. The first tokenized portfolios are slated for early 2026.

Karuss network of car dealers, banks and credit unions gives ETHZilla a large 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 — a measure of operating profit before interest, taxes, depreciation and amortization.

Under the agreement, ETHZilla will take a seat on Karus‘s board and receive certain governance rights. Karus’s backers include lead investor Stage Global Partners, as well as Tacoma Venture Fund and Capital Eleven.

Automotive loans comprise a significant segment of the US asset-backed securities market, which had approximately $1.6 trillion outstanding as of December 2024, according to SEC data.

John Kristoff, head of investor relations at ETHZilla, told Cointelegraph that the acquisition provides access to loan exposures that were previously limited to large institutional investment firms involved 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 the sixth-largest Ether treasury company, with 94,030 Ether (ETH) on its balance sheet, according to CoinGecko data.

Top Ethereum treasury companies. Source: Coingecko

Related: Ethereum treasury demand collapses: Will it delay ETHs recovery to $4K？

Tokenized fixed-income products surge in 2025

Tokenized debt markets have accelerated in 2025, with institutions increasingly using blockchain rails to issue and trade fixed-income products.

Tokenized US Treasurys and tokenized private credit, which bring government debt and corporate loans onchain, have become two of the largest segments of the emerging tokenized-debt market.

Tokenized Treasurys. Source: RWA.xyz

According to RWA.xyz data, tokenized Treasurys have grown to $9.21 billion, more than tripling from $2.68 billion a year earlier.

The shift has been driven by major asset managers, with BlackRock‘s BUIDL fund currently holding about $2.3 billion in tokenized Treasurys and Franklin Templeton’s US Government Money Fund holding roughly $827 million.

The tokenized private credit market has been dominated by Figure, which accounts for $13.98 billion of the sectors $19.02 billion market cap.

Tokenized Private Credit Volume. Source: RWA.xyz

The blockchain-based lender debuted on the Nasdaq on Sept. 11 after raising its list price several times as demand for its IPO soared.

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