Crypto treasury company ETHZilla has purchased a 20% fully diluted stake in the automotive-finance AI startup Karus, marking a significant move into on-chain credit. The $10 million deal consists of $3 million in cash and $7 million in ETHZilla stock.

This acquisition grants ETHZilla access to Karus’s sophisticated AI underwriting engine and its extensive loan origination network. The company plans to integrate these capabilities into its blockchain stack to issue tokenized auto-loan portfolios, with the first products scheduled for release in early 2026.

Karus’s decisioning engine provides a powerful foundation for the venture, as it’s trained on the historical outcomes of over 20 million auto loans and has already evaluated more than $5 billion in loans. This pre-modeled data set will allow ETHZilla to structure AI-segmented investment pools with on-chain settlement.

The deal also gives ETHZilla a seat on Karus’s board and certain governance rights. ETHZilla projects that every $100 million deployed into these Karus-modeled tokens could generate between $9 million and $12 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

Automotive loans represent a major part of the U.S. asset-backed securities market, which stood at approximately $1.6 trillion as of December 2024, according to SEC data. John Kristoff, head of investor relations at ETHZilla, noted that the initiative provides access to loan exposures previously limited to large institutional firms. He explained that bringing auto loans on-chain opens these high-quality, income-generating assets to a global investor base for the first time.

Tokenized Debt Markets See Major Growth in 2025

ETHZilla’s move into auto loans mirrors a broader acceleration in tokenized debt markets, as institutions increasingly use blockchain for issuing and trading fixed-income products. Tokenized U.S. Treasurys and private credit have emerged as two of the largest and fastest-growing segments.

Data shows the market for tokenized Treasurys has surged to $9.21 billion, more than tripling from $2.68 billion a year ago. This growth is led by major asset managers, with BlackRock’s BUIDL fund holding about $2.3 billion and Franklin Templeton’s U.S. Government Money Fund holding around $827 million in tokenized government debt.

The tokenized private credit market has also expanded, reaching a market cap of $19.02 billion. The blockchain-based lender Figure dominates this sector, accounting for $13.98 billion of the total market.