Ethereum Treasury Firm ETHZilla Pivots to Jet Engine Lease Tokenization as ETH Sinks

In brief

• ETHZilla has launched a new token that provides exposure to leased jet engines.
• The firm purchased two jet engines for around $12 million and leases them to an unnamed air carrier.
• Monthly distributions will be made to token holders on-chain when applicable.

Publicly traded Ethereum treasury ETHZilla is now participating firsthand in the tokenization trend that some experts say define the future of Ethereum  The firm, through a new wholly owned subsidiary called ETHZilla Aerospace, is offering tokenized access to equity in leased jet engines—that it acquired last week for around $12.2 million—via the Eurus Aero Token I deployed on the Arbitrum layer-2 network. "Offering a token backed by engines leased to one of the largest and most profitable U.S. airlines serves as a strong use case in applying blockchain infrastructure to aviation assets with contracted cash flows and global investment demand,” said ETHZilla Chairman and CEO McAndrew Rudisill, in a statement. 

“The Eurus Aero Token I expands investment access and modernizes fractional asset ownership in markets that have historically been available only to institutional credit and private equity,” he added. An ETHZilla representative told Decrypt that the firm cannot disclose the airline in question due to the terms of the lease. The token, available to accredited investors through the token marketplace of Liquidity.io, has a targeted return rate of around 11% if token holders hold throughout the full term of the leases, which extend into 2028. A disclaimer indicates that actual returns may “differ materially.”  As it stands, each month cash flows generated by the leased engines—two CFM56 commercial jet engines—will be distributed to token holders on-chain.

“Each token is secured by a collateral package consisting of aircraft engines, related lease receivables, reserves, and insurance proceeds pursuant to the transaction agreements with ETHZilla Aerospace serving as the issuer under ETHZilla’s management,” the firm’s statement reads.  The firm is offering 30,000 tokens, valued at $100 each, for equity in the leased engines, with a minimum investment of 10 tokens or $1,000 worth. At the time of writing, no orders or token transfers appear to have been made based on data from Arbitrum block explorer, Arbiscan. Shares in ETHZilla (ETHZ) are up around 5% on the day, recently changing hands at $3.40—still down 31% over the last month. The firm’s shares skyrocketed more than 200% last August after it was revealed that tech billionaire Peter Thiel had purchased a 7.5% stake in the firm.  Since that time, though, the firm has been searching for answers to improve shareholder value as excitement around digital asset treasuries has faded. It unveiled a $250 million share buyback program in late August amid falling share prices.  It later sold $40 million of its Ethereum holdings to buy back shares as its mNAV, or its multiple to net-asset-value, dropped below 1—indicating that the firm’s market cap was valued at less than its asset holdings. Its latest tokenization effort is expected to expand, as well, with the firm looking to offer tokenized access to manufactured home loans and car loans via existing partnerships.  The firm is not the only Ethereum treasury firm seeking other opportunities to drive shareholder value. BitMine Immersion Technologies, the largest publicly traded Ethereum firm, made a $200 million investment in the firm of YouTube star MrBeast as it seeks to generate outsized returns.  Meanwhile, SharpLink Gaming, the second-largest publicly traded Ethereum treasury firm, has committed itself to discipline, aiming to only acquire ETH when accretive to shareholders and choosing to stay away from investments that detract from its overall mission.

ETH is down nearly 40% in the last 30 days, recently changing hands around $1,919.