Crypto treasury company ETHZilla has made a strategic move into on-chain credit by acquiring a 20% fully diluted stake in automotive-finance AI startup Karus. The deal, valued at $10 million, comprises $3 million in cash and $7 million in ETHZilla stock. This acquisition will enable ETHZilla to integrate Karus’s underwriting AI models into its blockchain infrastructure for the issuance of tokenized auto-loan portfolios.
Karus’s decisioning engine has been trained on over 20 million historical auto-loan outcomes and has evaluated more than $5 billion in loans at origination. This provides ETHZilla with a pre-modeled dataset for structuring AI-segmented pools with on-chain settlement. The initial tokenized portfolios are anticipated for early 2026.
Through Karus's existing network of car dealers, banks, and credit unions, ETHZilla gains access to a substantial pipeline of potential loan portfolios for future on-chain securitization. ETHZilla projects that every $100 million deployed into Karus-modeled tokens could generate between $9 million and $12 million in adjusted EBITDA, a key measure of operating profit.
As part of the agreement, ETHZilla will assume a position on Karus’s board of directors and gain specific governance rights. Karus’s notable backers include lead investor Stage Global Partners, alongside Tacoma Venture Fund and Capital Eleven.
Automotive loans represent a significant portion of the US asset-backed securities market, which reported approximately $1.6 trillion in outstanding value as of December 2024, according to data from the Securities and Exchange Commission (SEC).
John Kristoff, head of investor relations at ETHZilla, explained that the acquisition provides access to loan exposures that were previously exclusive 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 currently ranks as the sixth-largest Ether treasury company, holding 94,030 Ether (ETH) on its balance sheet, according to CoinGecko data.
Tokenized Fixed-Income Products See Surge in 2025
The market for tokenized debt products has experienced significant acceleration in 2025, with institutions increasingly leveraging blockchain technology for the issuance and trading of fixed-income instruments. Tokenized U.S. Treasurys and tokenized private credit, which bring government debt and corporate loans onto the blockchain, have emerged as two of the largest segments within the burgeoning tokenized-debt market.
Data from RWA.xyz indicates that tokenized Treasurys have grown to $9.21 billion, more than tripling from $2.68 billion recorded a year prior. This shift has been propelled by major asset managers, with BlackRock’s BUIDL fund holding approximately $2.3 billion in tokenized Treasurys, and Franklin Templeton’s U.S. Government Money Fund holding around $827 million.
The tokenized private credit market is largely dominated by Figure, which accounts for $13.98 billion of the sector's total market capitalization of $19.02 billion.
Figure, a blockchain-based lender, debuted on the Nasdaq on September 11, having raised its initial listing price multiple times due to soaring demand for its Initial Public Offering (IPO).