ETHZilla's Strategic Acquisition of Zippy
Former biotech company ETHZilla has completed its second acquisition in a week, taking a 15% stake in digital housing lender Zippy. This move aims to bring manufactured-home loans onto the blockchain.
ETHZilla will pay $5 million in cash and $16.1 million in stock for the stake in Zippy, a U.S.-based lender founded in 2021. Zippy originates manufactured-home loans through a digital platform. The companies plan to integrate Zippy's loan-origination and AI-powered systems with ETHZilla's tokenization stack. This integration will facilitate the on-chain distribution of manufactured-home chattel loans, including potential forward-flow sales to institutional investors.
The transaction grants ETHZilla a board seat at Zippy and secures a 36-month exclusivity period. The agreement stipulates that Zippy must conduct all blockchain infrastructure, digital asset issuance, and tokenization exclusively through ETHZilla's platforms. This deal signifies ETHZilla's strategic pivot into real-world asset markets, following its transition from the biotech sector.
ETHZilla's Broader Real-World Asset Market Push
This announcement follows ETHZilla's acquisition of a 20% fully diluted stake in auto-finance startup Karus for $10 million in cash and stock, which occurred just one week prior. ETHZilla, which holds Ethereum as a treasury asset, stated that this investment supports its broader strategy to enter real-world asset (RWA) markets.
The company's stock price experienced a decline of approximately 10% at the time of writing, according to Yahoo Finance data. Several publicly traded companies that have incorporated Ethereum as a balance-sheet asset this year have witnessed significant reversals in their share prices as the token's price has fallen from its peak.
ETHZilla, previously known as 180 Life Sciences Corp, announced its transition to an Ethereum treasury company on July 29. Its stock price saw a substantial increase, opening at $45 and closing at $107 by August 13. However, the stock has since declined by roughly 91%, trading around $10.
Challenges Faced by Ethereum Treasury Companies
SharpLink Gaming also launched an Ethereum treasury strategy in May, accompanied by a $425 million private placement that included Consensys as an investor. This move coincided with the nomination of Ethereum co-founder Joseph Lubin as chairman. The company's stock price initially climbed over 130% on the news, reaching $79.21 on May 29. However, it has since dropped sharply, trading around $11.77 on Wednesday, according to Yahoo Finance data.
Bitmine Immersion, an Ethereum treasury company led by Fundstrat co-founder Tom Lee, has also faced difficulties in recent months. Its stock reached an all-time high of $135 in July but has since fallen to approximately $40. Kadan Stadelmann, chief technology officer at Komodo Platform, cautioned in August that companies adopting Ethereum treasury strategies are exposed to structural risks. He warned that a market downturn could compel liquidations and amplify selling pressure on the token.
Impact of Ethereum's Price Fluctuation
Ethereum has seen a significant decline from its all-time high of $4,946.05 on August 24, and is currently trading at $3,365. This decrease in Ethereum's price has had a direct effect on the stock valuations of treasury companies. A clear correlation has emerged between the performance of the cryptocurrency market and the equity prices of firms holding digital assets on their balance sheets.