ETHZilla Publishes Shareholder Letter from Chairman of the Board

Rhea-AI Summary

ETHZilla (Nasdaq: ETHZ) published a shareholder letter outlining 2026 priorities: tokenizing real-world assets (RWA) on Ethereum Layer 2, strategic partnerships, and capital actions to support growth.

Key highlights include an exclusive partnership and equity stake with Liquidity.io to list tokenized assets, equity stakes in Karus and Zippy to source auto and manufactured-home loans, secured first assets for tokenization, and the $516 million redemption plan for 2028 convertible notes. ETHZilla expects its first RWA token on Liquidity.io in early 2026 and plans flexible capital allocation between ETH and USD to fund acquisitions.

Positive

• Exclusive Liquidity.io partnership to list compliant tokenized assets
• Equity stakes in Karus and Zippy provide large asset pipelines
• Intends to list first RWA token in early 2026

Negative

• Redeeming $516 million convertible notes may tighten near-term liquidity
• May need to raise additional capital, risking dilution
• Balance-sheet exposure to ETH introduces crypto price volatility

Key Figures

2028 convertible notes $516 million Outstanding notes targeted for redemption announced Dec 10

Dealership network Over 20,000 dealerships, credit unions and banks Karus origination network for auto loans

Auto loans processed More than $5 billion Auto loan volume processed by Karus platform

Manufactured housing loans Over 5,000 loans serviced Loans serviced by Zippy platform

Manufactured housing market ~$14 billion Estimated size of manufactured home loan market

Convertible maturity 2028 Maturity year of convertible notes referenced in letter

Current share price $6.95 Price before shareholder letter publication

52-week range $6.82–$74.50 52-week low and high prior to this news

Market Reality Check

$6.90 Last Close

Volume Volume 1,293,977 is 1.17x the 20-day average of 1,109,109 ahead of this letter. normal

Technical Price $6.95 is below the $21.18 200-day MA and 90.67% below the 52-week high, hovering just above the 52-week low of $6.82.

Peers on Argus

ETHZ fell 12.19%, while biotech peers like ABSI (-8.38%), INBX (-5.95%), and LXRX (-6.11%) also declined. ETHZ’s drop is steeper, suggesting company-specific pressure alongside broader weakness.

Historical Context

Date	Event	Sentiment	Move	Catalyst
Dec 10	Debt redemption	Positive	-8.2%	Plan to redeem <b>$516M</b> 2028 convertible notes to streamline capital structure.
Dec 10	Strategic partnership	Positive	-8.2%	15% stake in Zippy and plan to tokenize manufactured home loans on-chain.
Dec 09	Financing & crypto update	Positive	+5.0%	Additional <b>$350M</b> convertible debentures and disclosure of large ETH and cash balances.
Dec 03	AI tokenization deal	Positive	+6.5%	Acquisition of 20–24% of Karus to power AI-modeled auto-loan tokenization.
Nov 14	Management change	Neutral	-8.2%	Promotion of John T. Saunders to Chief Financial Officer after Q3 filing.

Pattern Detected

Across recent financing, strategic partnership, and management updates, ETHZ has shown volatile reactions, with 3 divergences versus news tone and 2 aligned moves.

Recent Company History

Over the past months, ETHZilla has pivoted into digital-asset operations and real‑world asset tokenization, backed by large convertible note financings and extensive ETH and cash holdings. It announced AI‑driven auto‑loan tokenization via Karus on Dec 3 and a Zippy deal targeting a $14 billion manufactured housing market on Dec 10. The same day, it revealed plans to redeem $516 million of 2028 convertible notes. Recent news often combines strategic progress with complex capital-structure changes, and market reactions have been mixed.

Regulatory & Risk Context

Active S-3 Shelf Registration 2025-10-06

An effective S-3ASR filed on Oct 6, 2025 registers the resale of 187,618,958 shares issuable upon conversion of Additional Convertible Notes, taking pro forma shares to 347,795,080. The company receives no proceeds, and selling holders control sale timing and method, creating potential stock overhang.

Market Pulse Summary

This announcement provides a comprehensive update on ETHZilla’s execution, highlighting partnerships with Liquidity.io, Karus, and Zippy to build tokenized auto and manufactured housing loan products and noting plans to redeem $516 million of 2028 convertible notes. It outlines four revenue engines around yield, origination, asset management, and transaction fees, with first RWA tokens targeted for early 2026. Investors may monitor progress toward token launches, capital allocation between ETH and USD, and any use of the existing S-3ASR resale registration.

Key Terms

decentralized finance financial

"a technology company bringing decentralized finance infrastructure to traditional finance"

Decentralized finance, often called DeFi, is a way of using digital technology to offer financial services like lending, borrowing, and trading without relying on traditional banks or institutions. It operates on open networks where anyone can participate, much like a digital marketplace that runs on shared computer systems. For investors, DeFi provides more direct control over their assets and access to financial activities outside conventional systems.

real-world assets financial

"bring real-world assets (RWA) on-chain through tokenization"

Real-world assets are physical or financial things of value—like property, commodities, loans, or art—that exist outside digital markets and can be bought, sold, or used as collateral. For investors, they matter because they often provide steady income, reduce reliance on volatile paper markets, and can add diversification much like owning a rental property beside stock holdings. Treat them like tangible building blocks that can stabilize a portfolio and back the value of financial products.

tokenization technical

"bring RWA on-chain through tokenization"

Tokenization is the process of converting real-world assets or rights into digital tokens stored on a computer network. This allows assets, such as property or investments, to be divided into smaller parts, making them easier to buy, sell, or transfer electronically. For investors, tokenization can increase access to a wider range of investments and make transactions faster and more efficient.

ethereum layer 2 (l2) technical

"create Ethereum Layer 2 (L2) tokenized assets and turn them into tradable"

Ethereum Layer 2 (L2) is an additional network built on top of the main Ethereum blockchain that handles transactions off the main chain to make them faster and much cheaper, while periodically anchoring results back to Ethereum for security. Think of it as express lanes on a busy highway that settle with the main road at checkpoints; investors care because lower fees and quicker transactions can boost user adoption and token utility, but L2 solutions also introduce technical and integration risks that can affect value and liquidity.

convertible notes financial

"redeem the outstanding $516 million of our 2028 convertible notes"

Convertible notes are a type of short-term loan that a company receives from investors, which can later be turned into company shares instead of being paid back in cash. They matter to investors because they offer a way to support a company early on while giving the potential to own a stake in its success if the company grows and later raises more funding.

on-chain technical

"bring RWA on-chain through tokenization"

On-chain describes actions or data that are recorded directly on a blockchain, a public digital ledger that creates a permanent, time-stamped record of transactions. For investors, on-chain activity provides verifiable evidence of transfers, ownership changes or automated program actions (like contract-driven payments); seeing these entries is like checking a bank statement and helps assess liquidity, settlement finality, fees, and transparency when judging risk and market behavior.

alternative trading systems (ats) regulatory

"one of only a handful of SEC-registered Digital Alternative Trading Systems (ATS)"

Alternative trading systems (ATS) are privately operated trading venues that match buyers and sellers of stocks and other securities outside traditional public exchanges. Think of them as specialized online marketplaces or matching apps that can offer faster trades, lower fees, or different rules; they matter to investors because they affect where orders are filled, the prices investors get, and overall market liquidity and transparency.

tokenized income products financial

"bring to market as tokenized income products on Ethereum L2 protocols"

Tokenized income products are financial assets that convert a promise of future cash flow—such as rent, interest, royalties or dividends—into digital tokens that represent fractional ownership on a secure electronic record. For investors, they work like a digital claim on a steady paycheck from an asset but broken into smaller pieces you can buy or sell more easily, potentially improving access, price discovery and trading hours while introducing technology and regulatory considerations.

AI-generated analysis. Not financial advice.

PALM BEACH, Fla., Dec. 16, 2025 /PRNewswire/ -- ETHZilla Corporation (Nasdaq: ETHZ), a technology company bringing decentralized finance infrastructure to traditional finance, today published a shareholder letter to highlight recent strategic execution and momentum around its go-forward value creation roadmap. The full text of the letter can be found below.

Dear Fellow Shareholders,

As we near the end of the calendar year, I want to take the opportunity to reflect on the progress we have made and share our vision for 2026 and beyond. When we launched ETHZilla just five months ago, we set out on a mission to reimagine how a public company could connect institutional capital with decentralized finance through Ethereum. Our plan was simple: accumulate Ether (ETH) and deploy it with discipline to generate yield, while we build an operating business to bring real-world assets (RWA) on-chain through tokenization. Our plan has been to lay the foundation for growth through disciplined capital deployment and strategic partnerships to power the business. Since that time, we have executed on several elements of the strategy and our focus on these goals has only intensified.

Creating the Foundation for RWA Tokenization

Over the past few months, we have established the core capabilities needed to successfully bring RWA on-chain through tokenization. In October, we announced a partnership with Liquidity.io, a regulated broker-dealer and one of only a handful of SEC-registered Digital Alternative Trading Systems (ATS), which included an equity stake in its parent company. This critical partnership provides ETHZilla with exclusive access to a fully regulated exchange where we intend to create Ethereum Layer 2 (L2) tokenized assets and turn them into tradable, compliant instruments with primary and secondary liquidity.  This represents the necessary foundation upon which we plan to scale and grow our tokenization business and provided us confidence to move to the next phase of our growth plan: building strong pipelines of RWA to bring on chain. 

The Right Strategic Partnerships

The total addressable market for tokenization of RWA is projected to be trillions of dollars, thus we have chosen to initially focus our efforts in specific areas:

• Auto loans, with the opportunity to further expand into consumer credit
• Manufactured home loans, with the future potential to participate in mortgages
• Aerospace equipment, with the prospect to enter maritime and other heavy equipment markets
• Land/commercial real estate, with the ability to expand into broader real estate

We believe strategic partnerships are attractive and necessary to rapidly scale our tokenization business. Recently, we announced strategic partnerships and equity stakes in Karus and Zippy, partners that expand our access to high-quality, scalable credit assets -- auto loans and manufactured housing loans – establishing a foothold in our first two focus areas. These two large markets are well suited for tokenization and have historically been dominated by a handful of large private and institutional investors. This creates an opportunity to tokenize assets that most investors cannot readily access today, opening up an entirely new investment category. Our strategic investments in Karus and Zippy were established through competitive processes and extensive rounds of due diligence, and we were the partner of choice due to our capabilities and infrastructure on Ethereum L2s as well as strong alignment on our joint vision of the market opportunity.  

Karus and Zippy both provide ETHZilla with exclusive access to large, high-quality asset pools that we intend to aggregate, structure, and bring to market as tokenized income products on Ethereum L2 protocols. These partnerships are helping us create a tokenization pipeline, which gives us line of sight into revenue and cashflow generating opportunities in 2026:

• Karus brings AI-driven credit modeling, a deep origination network of over 20,000 car dealerships, credit unions and banks, and a platform that has processed more than $5 billion in auto loans. By bringing auto loans on-chain, we're able to open these high-quality, income-generating assets to a global investor base for the first time, as historically, they have been limited to complex securitization structures from large institutional investment firms.
• Zippy provides an institutional-grade lending and servicing platform for manufactured housing, a growing segment of the U.S. credit market, and has serviced over 5,000 loans. Manufactured home loans are a high-yield, high-quality asset class historically accessible only to a handful of private lenders, despite representing a ~$14 billion market[1]. Tokenization allows us to open this segment to a broader range of investors, making it a compelling fit for ETHZilla's on-chain securitization framework. We also believe that facilitating financing breadth for manufactured homes is an important step in adding housing supply amidst an ongoing national shortage.

In the heavy equipment market, we will initially focus on aerospace assets such as aircraft engines and airframes to tokenize. Members of our leadership team and board have deep relationships in the aerospace industry, which we are leveraging to build an initial pipeline of assets to tokenize without the need for additional partnerships. This represents a large, growing market with quality high-yielding assets, and we believe it is a very attractive space for tokenization.

The progress we have made in the early stages of building our tokenization pipeline and expanding the asset base we plan to bring on-chain demonstrates the momentum we believe we can generate. The multi-trillion-dollar U.S. commercial real estate market represents what we believe is yet another attractive sector for tokenization.  

A Scalable Model for On-Chain Income

To make tokenized income products a core part of the financial landscape and accessible globally through regulated infrastructure, our tokenization model brings together four complementary economic engines for ETHZilla:

1. Yield: Yield generation on assets ETHZilla acquires and holds on our balance sheet until they are tokenized
2. Origination Fees: Creation of tokenized investment products on Liquidity.io from those assets, generating revenue and origination fees when they are sold, which can then be reinvested into acquiring additional assets to tokenize
3. Asset Management Fees: Recurring revenue generation from asset management fees as investors hold these tokens
4. Transaction Fees: Revenue from a portion of the bid/ask spread transaction fees as these tokens are eventually traded on the secondary market on Liquidity.io

As additional assets come online, we believe this pipeline will support meaningful revenue growth and scalable, recurring cash flow. The businesses we are entering exhibit minimal underlying cash flow volatility, supported by rigorous, AI-assisted underwriting standards, diversified exposures, and aligned partnership dynamics. Our progress to date and future goals demand that we retain access to capital to pursue and redeploy toward accretive opportunities. 

Entering the Next Phase of Execution & Looking Ahead

On December 10, we announced our intention to redeem the outstanding $516 million of our 2028 convertible notes. This action streamlines our capital structure and enhances flexibility as we enter a new period of product launches, revenue generation, and operational scaling.

ETHZilla has secured our first assets for tokenization, and we intend to fund the transaction using existing on-balance-sheet cash. We expect to list our first RWA token on Liquidity.io in early 2026. As we expand into additional asset classes, we are evaluating options to fund the acquisition of new assets for tokenization, which may require a more dynamic allocation between Ethereum and US dollars on our balance sheet. We also believe strong market adoption and attractive growth opportunities may lead us to raise additional capital or pursue deal-specific financing in the future to support value creation.

We are confident we have the team, the strategy and the pipeline in place to execute against these plans in 2026 and beyond.  Our board brings deep market connectivity to generate new business and partnership opportunities, along with disciplined oversight of our value creation strategy. Looking ahead, we intend to pursue board expansion and diversification initiatives to further strengthen our governance framework.

We believe tokenization is accelerating across global markets, with Ethereum emerging as the programmable infrastructure of choice to support this transition, albeit still in its early stages. As previously stated, our view is that the market is approaching an inflection point toward the tokenization of all assets, and ETHZilla is well positioned to be a first mover.

With a focused and capable leadership team, the right strategic partnerships, a purpose-built platform, and a growing pipeline of tokenization opportunities, ETHZilla is entering 2026 with substantial potential as our operational flywheel begins to turn. Companies that execute early and at scale are poised to define the future structure of on-chain finance, and ETHZilla has a compelling opportunity to play a leading role in shaping this emerging landscape. Thank you for your continued support, and we look forward to continuing to engage with our shareholders and other constituents in the new year.

McAndrew Rudisill
Chairman and Chief Executive Officer
ETHZilla Corporation

About ETHZilla

ETHZilla Corporation (Nasdaq: ETHZ) is a technology company in the decentralized finance (DeFi) industry. ETHZilla seeks to connect financial institutions, businesses and organizations worldwide by enabling secure, accessible blockchain transactions through Ethereum network protocol implementations. It generates recurring revenues through various DeFi protocols that improve Ethereum network integrity and security. ETHZilla believes it has the unique capability to bring traditional assets on-chain via tokenization. Through its proprietary protocol implementations, ETHZilla facilitates DeFi transactions and asset digitization across multiple Layer 2 Ethereum networks. ETHZilla is working to offer tokenization solutions, DeFi protocol integration, blockchain analytics, traditional-to-digital asset conversion gateways, and other decentralized finance services. To learn more, visit ETHZilla.com.

Forward Looking Statements

This press release contains "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the expected benefits of the relationships with Karus and Zippy, expectations with respect to future performance, and growth of the Company; the ability of the Company to execute its plans, undertake tokenization activities and achieve future performance.

Forward looking statements are subject to numerous risks and uncertainties, many of which are beyond the Company's control, and actual results may differ materially. Applicable risks and uncertainties include, among others, failure to realize the anticipated benefits of the transaction described herein; failure to realize the anticipated benefits of the Company's previously disclosed stock repurchase program, previously announced private placements, sale of convertible notes, and related transactions, including the Company's digital asset treasury strategy; the Company's ability to achieve profitable operations; risks relating to the Company's stock repurchases, the fact that common stock share repurchases may not be conducted in the timeframe or in the manner the Company expects; expectations regarding the capitalization, resources and ownership structure of the Company; the Company's plans to continue to purchase ETH over time, the Company's digital asset treasury strategy, the digital assets held by the Company, the Company's current and anticipated yield strategies, including its participation in DeFi protocols and plans for tokenization of real world assets; fluctuations in the market price of ETH that will impact the Company's accounting and financial reporting; government regulation of cryptocurrencies; the Company's ability to repurchase shares of common stock, the timing thereof, purchase price thereof, and the fact that repurchases may not be undertaken under the stock repurchase program; changes in securities laws or regulations; changes in business, market, financial, political and regulatory conditions; risks relating to the Company's outstanding convertible notes, including the Company's ability to repay such notes, covenants associated therewith and dilution caused by the conversion thereof into common stock, and security interests associated therewith; risks relating to the Company's OTC transactions, including the Company's ability to repay such facilities, covenants associated therewith and security interests associated therewith, including security interests over certain of our cash and ETH; risks relating to the Company's previously announced ATM offering, including potential downward pressure on the Company's stock price associated therewith; risks relating to the Company's operations and business, including the highly volatile nature of the price of Ether and other cryptocurrencies; the risk that the Company's stock price may be highly correlated to the price of the digital assets that it holds; risks related to increased competition in the industries in which the Company does and will operate; risks relating to significant legal, commercial, regulatory and technical uncertainty regarding digital assets generally; risks relating to the treatment of crypto assets for U.S. and foreign tax purpose, expectations with respect to future performance, growth and anticipated acquisitions; potential litigation involving the Company; global economic conditions; geopolitical events and regulatory changes; access to additional financing, and the potential lack of such financing; and the Company's ability to raise funding in the future and the terms of such funding, including dilution caused thereby, as well as those risks and uncertainties identified and those identified under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, as well as the supplemental risk factors and other information the Company has or may file with the SEC. Readers are cautioned not to place undue reliance on these statements. Investors should also be aware that under U.S. generally accepted accounting principles (GAAP), certain crypto assets must be measured at fair value, with changes recognized in net income for each reporting period. These fair value adjustments may cause significant fluctuations in the Company's balance sheet and income statement from period-to-period. In addition, for certain crypto assets, including ETH, which the Company holds, impairment charges may be required to be reported in net income if the market price of such assets (including ETH) falls below the cost basis at which those assets are carried on the balance sheet. Readers are encouraged to read the Company's filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this document, and the Company undertakes no obligation to update any forward-looking statements except as required by law. The Company's business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.

[1] Source: Mordor Intelligence "United States Manufactured Homes Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)" report

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SOURCE ETHZilla Corporation

FAQ

What did ETHZilla announce about Liquidity.io and tokenization?

ETHZilla said it secured an exclusive partnership and equity stake with Liquidity.io to create and list compliant tokenized assets on an SEC-registered ATS.

When will ETHZilla list its first RWA token on Liquidity.io (ETHZ)?

The company expects to list its first RWA token in early 2026.

What is the significance of ETHZilla redeeming $516 million of 2028 convertible notes?

The redemption is intended to streamline the capital structure and increase flexibility for product launches and scaling.

How do Karus and Zippy contribute to ETHZilla's tokenization pipeline (ETHZ)?

Karus offers AI credit models and access to >$5 billion in processed auto loans; Zippy services >5,000 manufactured-home loans, supplying assets for tokenization.

Will ETHZilla need more funding to scale tokenization initiatives (ETHZ)?

The company said it may raise additional capital or pursue deal-specific financing as adoption and opportunities grow.