ETHZilla fractionalizes leased aircraft engine monthly cashflows with its Eurus Aero Token I

ETHZilla (NASDAQ: ETHZ), the Ethereum treasury firm that has recently pivoted toward tokenization, has launched Eurus Aero Token I, a first-of-its-kind effort to fractionalize ownership of leased aircraft engines.

The token will enable investors to gain exposure to cash flows generated by the newly formed subsidiary ETHZilla Aerospace, which has leased two commercial jet engines to a “leading U.S. air carrier.”

These cashflows, including base rent and utilization-based payments, will be distributed onchain using an ERC-20 token with token holders receiving “cash or immediately available funds, to the extent that funds are available for distribution.”

This is not ETHZilla’s first tokenization experiment involving a non-obvious investment opportunity. Last week, the firm, which is backed by Peter Thiel’s Founders Fund, tokenized a portfolio of 95 home loans.

Tokenization, the idea of bringing so-called real-world assets onchain, has emerged as one of the more active areas of the blockchain industry, involving asset classes from private credit and sovereign debt to the full range of commodities and equities. 

Last week, Ark Invest estimated tokenized assets could grow to about $11 trillion by 2030, up from a current market size of roughly $22 billion.

ETHZilla was one of the buzzier Ethereum investment companies, backed by a $425 million PIPE agreement to form its digital asset treasury (DAT). However, the firm began selling ETH as it adopted its RWA strategy late last year.

“This transaction marks an important milestone in our effort to bring real-world, income-producing assets on-chain at institutional scale,” ETHZilla CEO McAndrew Rudisill said. “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.”

The Eurus Aero Token I will be secured by a collateral package consisting of aircraft engines, related lease receivables, reserves, and insurance proceeds, the firm said. The leases reportedly extend into 2027 and 2028, and include a $3 million put/call right, allowing ETHZilla to sell the engines to the jet engine services provider.

Further, any residual proceeds left at the end of the lease term are expected to be distributed pro rata to token holders, meaning investors “could benefit from both current income and end-of-term capital recovery.”

ETHZilla is planning to launch additional “Ethereum L2 tokens” for other asset classes, like manufactured home loans and car loans, through its existing agreements with Zippy and Karus, the firm said.