ETHZilla and Karus Collaborate to Transform Auto Loan Tokenization with AI

Revolutionizing Auto Loan Tokenization

In a groundbreaking move set to transform the landscape of auto finance, ETHZilla Corporation (Nasdaq: ETHZ) has announced a partnership with Karus, Inc. This strategic acquisition involves ETHZilla securing a 20% stake in Karus, a prominent player in the realm of AI-enhanced auto finance decision-making. The partnership aims to synergize Karus’ advanced predictive credit analytics with ETHZilla’s robust blockchain infrastructure to bring the complexities of auto loan asset management onto the blockchain.

The Investment Details

On December 3, 2025, ETHZilla revealed its intent to invest $8 million in Karus, with the funds allocated as follows: $3 million in cash and $5 million in ETHZilla common stock. This investment is projected to not only bolster Karus’s operational capabilities but also place ETHZilla at the forefront of the burgeoning $1.6 trillion market for asset-backed securities in the U.S.

As part of this deal, ETHZilla will tap into Karus's extensive connections spanning over 20,000 auto loan originators, including a diverse array of car dealerships and financial institutions. This network is anticipated to cultivate a rich pool of portfolios that can be tokenized, thereby creating more accessible investment opportunities.

The Role of AI in Auto Loans

Central to this collaboration is the integration of Karus’s powerful AI-driven underwriting systems into ETHZilla’s blockchain platform. Karus has processed more than $5 billion in auto loan volume through its cutting-edge point-of-origination decisioning engine, which analyzes more than 1,000 variables—including credit scores, vehicle data, and macroeconomic indicators—in real-time. This enables a sophisticated assessment of borrower risk and associated collateral, paving the way for more accurate and transparent loan structuring.

McAndrew Rudisill, ETHZilla's CEO, emphasized the importance of AI in reshaping risk forecasting. He stated, “Karus's AI models are bringing the pricing and management of loan-level risk into the future. We are confident that this will aid us in structuring and tokenizing loan pools with unprecedented accuracy and transparency.”

The implications of this integration are significant. With the expected launch of the first tokenized auto loan portfolios in early 2026, investors will have the chance to engage with transparent, risk-adjusted auto credit products featuring on-chain settlement and analytics developed through Liquidity.io—the entity designated for trading these tokenized portfolios.

Addressing Growing Institutional Demand

This collaboration signifies ETHZilla’s strategic shift beyond digital assets to embrace large-scale real-world market opportunities, especially as institutional demand for transparent on-chain securitization continues to rise. The tokenization of auto loans could fundamentally alter how traditional finance interacts with blockchain technology, offering a glimpse into the future of digital assets.

Aaron Travis, CEO of Karus, stated, “By merging our AI capabilities with ETHZilla’s blockchain technology, we aim to create a scalable digital fixed-income product from predictive auto loan-performance data.” The partnership underscores a shared vision to innovate within financial sectors that have historically lagged in technological adoption.

Future Expectations

Looking ahead, ETHZilla anticipates that for every $100 million deployed in the Karus token, projected returns could yield between $9 million and $12 million in adjusted EBITDA. This could significantly impact ETHZilla's revenue streams as it positions itself as a new player in securitization.

In terms of governance, as part of the transaction finalized on December 2, 2025, ETHZilla will take an active role by appointing a director to the Karus Board of Directors, thus ensuring an influential position in the strategic direction of the company.

As the landscape of auto finance evolves, ETHZilla’s partnership with Karus stands as a testament to the transformative power of AI and blockchain in streamlining processes and opening up new avenues for investment.

For further updates on this strategic partnership and other developments, visit ETHZilla's official website.