ETHZilla abandons Ethereum to focus on real estate! Tokenized $4.7 million mortgage with a 10% annual interest rate

Ethereum digital asset vault ETHZilla (ETHZ) has acquired a portfolio of 95 manufactured and modular housing loans valued at $4.7 million, with plans to tokenize them on the Ethereum Layer 2 network. These loans are secured by first lien mortgages and are expected to generate an annual yield of approximately 10%. The tokens will be converted into cash-flow-generating digital assets through a regulated broker-dealer, Liquidity.io.

Business Logic Behind the $4.7 Million Mortgage Tokenization

ETHZilla is a company focused on digital assets on Ethereum, actively promoting real estate tokenization. It has acquired a portfolio of manufactured and modular housing loans worth $4.7 million. According to an announcement shared with CoinDesk on Thursday, the company plans to tokenize these 95 loans on Ethereum’s Layer 2 network, aiming to convert the loans into digital tokens that produce cash flow, which can be accessed via Liquidity.io, a regulated broker-dealer and trading platform.

The company states that these loans are secured by first lien mortgages, with an expected annual return of about 10%. First lien means that in case of default, the loan holders (now token holders) have priority to claim the collateral—namely, the property—by auctioning the property to recover their investment. This legal protection significantly reduces the risk compared to unsecured crypto assets.

A 10% annual yield is highly attractive in the current low-interest-rate environment. The yield on 10-year U.S. Treasury bonds is around 4-5%, investment-grade corporate bonds yield about 5-6%, and a 10% return is typically only available through high-yield bonds or private credit. Manufactured and modular housing loans are considered subprime mortgages, often involving borrowers with lower credit scores or smaller down payments, thus carrying higher default risk but offering higher interest rates. ETHZilla’s tokenization of these high-risk, high-yield loans provides a new income stream for crypto investors.

ETHZilla’s Chairman and CEO, McAndrew Rudisill, stated: “This transaction is a natural extension of our ongoing real estate tokenization strategy. Manufactured housing loans offer predictable cash flow and strong collateral, making them very suitable for tokenization within a regulated and transparent structure.”

Three Key Selling Points of Mortgage Tokenization

Stable Cash Flow: Monthly mortgage payments provide predictable income, with an annual yield of 10%

Physical Collateral: First lien mortgage ensures that in case of default, the property can be auctioned to recover principal

Regulated Trading: Conducted through Liquidity.io with a compliant broker-dealer, reducing legal risks

Path of Transformation Driven by 90% Stock Price Collapse

ETHZilla’s shift toward real estate tokenization comes after a significant decline in its core crypto holdings. Its stock price soared to a high of $107 in August 2025 but has since plummeted over 90%, now trading below $10. This dramatic fall reflects the fundamental difficulties in ETHZilla’s business model: over-reliance on a single highly volatile asset. When Ethereum’s price dropped more than 50 from its peak in 2025, ETHZilla’s asset value shrank accordingly, causing its stock to crash.

Last year, ETHZilla sold over $110 million worth of ETH to buy back shares and pay down debt. This large-scale sell-off indicates serious financial stress. The motivations for selling ETH could be twofold: first, to pay off debts and avoid default; second, to buy back shares and support the stock price. Either way, it shows the company’s urgent need for cash and a pessimistic outlook on ETH’s short-term prospects. For a company named “Ethereum Treasury,” selling off ETH en masse is essentially a negation of its core business model.

In a December letter to shareholders, the company outlined plans to establish a standardized framework for real estate tokenization across various assets, from aircraft engines to auto loans. The new mortgage portfolio follows ETHZilla’s previous investment in manufacturing mortgage lender Zippy, and the company also plans to acquire two jet engines via tokenization. This diversification indicates ETHZilla’s systematic transformation from a pure crypto asset holder to a multi-asset tokenization platform for real-world assets.

ETHZilla’s Tokenization Portfolio

Real Estate: $4.7 million in 95 mortgages (completed)

Aviation Assets: Two jet engines (planned)

Auto Finance: Auto loan portfolio (in planning)

Strategic Investment: Investment in manufacturing mortgage lender Zippy

This shift from purely crypto holdings to tangible assets reflects broader industry trends. When pure crypto holdings are battered in a bear market, RWA (Real-World Asset) tokenization becomes a new lifeline. Assets like mortgages, equipment leases, and receivables, while lacking the explosive growth potential of native crypto assets, offer stable cash flow and lower volatility—crucial for listed companies that need steady income to support stock prices and debt repayment.

Risks and Challenges of Mortgage Tokenization

However, real estate tokenization is not without risks. First is credit risk: manufactured and modular housing loans are considered subprime, with higher default rates than traditional mortgages. Although secured by property, if property values decline or auction prices fall below the loan balance, token holders could suffer losses. The high 10% yield compensates for this risk.

Second is liquidity risk. Traditional mortgages can be traded in secondary markets or securitized, but the secondary market for tokenized mortgages is still immature. If token holders need to liquidate early, they may struggle to find buyers or have to sell at significant discounts. While Liquidity.io is a regulated trading platform, its trading volume and liquidity depth are far below mainstream crypto exchanges.

Third is regulatory risk. Mortgage tokenization involves complex securities, real estate, and financial regulations. Any compliance lapses could lead to legal disputes. Although Liquidity.io’s regulated status offers some protection, as a new product, mortgage tokenization faces an evolving regulatory framework that could impose additional requirements or restrictions in the future.

For ETHZilla’s shareholders, this transformation presents both opportunities and risks. Optimists see diversification reducing dependence on a single crypto asset, with the 10% mortgage yield providing stable cash flow to support dividends and stock prices. Pessimists question whether a company named “Ethereum Treasury” shifting heavily into real estate indicates a loss of confidence in the crypto market. If ETHZilla truly believes in Ethereum’s long-term prospects, why not buy more ETH at current lows instead of pivoting to entirely different businesses?

This fundamental shift in business model also raises questions about the company’s identity. Is ETHZilla primarily an Ethereum investment firm or a tangible asset tokenization platform? This ambiguity could confuse investors and impact valuation. Pure crypto treasury companies can enjoy high valuation multiples during a bull market, but once they pivot to mortgages or equipment leasing, valuation logic shifts to that of traditional financial firms, often at lower multiples.