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Backed by Peter Thiel, ETHZilla is betting big on staking and onchain yields. Today's Issue ⬇️ - 🗣️ Analysis: The ETHZilla Opp
The most onchain-native treasury fund?
Sponsor: Mantle — Mantle is pioneering "Blockchain for Banking,” a revolutionary new category at the intersection of TradFi and Web3. . . . ANALYSIS The ETHZilla Opportunity The ETHZilla team recently joined us on the Bankless podcast, sharing fresh insights into their strategy and vision as one of the newest players in the ETH treasury space. With backing from renowned investor Peter Thiel and a DeFi-centric approach to corporate ETH holdings, they're building something that goes well beyond the standard Digital Asset Treasury (DAT) playbook. ETHZilla's HistoryThe company that would become ETHZilla first started as 180 Life Sciences Corp., developing biotech drugs for chronic pain and inflammation. This wasn’t their only venture though, they also experimented with software-driven gaming before making their pivot to Ethereum in early August. Ramping up quickly, between August 12-18, they rebranded to ETHZilla (ticker: ETHZ) and raised $425M through a PIPE with over 60 investors. For context, a PIPE (private investment in public equity) lets public companies sell shares directly to large investors in private deals, raising capital quickly without the standard market processes. Once they’d received the capital, they partnered with prominent venture firm, Electric Capital, for yield management and immediately started building their position, beginning with 82,186 ETH on August 12. In conversation with Bankless, Electric Capital’s Avichal Garg and ETHZilla’s Mac Rudisill explained their choice of a treasury model over ETFs, citing: - ETF fees and restrictions: 1.5-2% annual fees, no U.S. staking allowed
- ETF inefficiency: 20-25% kept unstaked for redemptions, 20-day exit queues causing underperformance vs. basic staking
- Treasury advantages: Full staking plus additional on-chain yields, giving shareholders ETH exposure and cash flow participation
- Institutional access: Direct DeFi management requires complex custody and governance, while public company shares offer simple exposure
The duo further explained the impetus for starting the treasury now, highlighting regulators clearing ETH as a non-security through ETF approvals, stablecoin legislation advancing (important for ETH as the network holds the most stablecoins), and the institutional appetite we all know well for ETH exposure, still trailing but rapidly catching up to Bitcoin adoption. As of August 27, ETHZilla holds 102,237 ETH, purchased at an average of $3,948.72 for roughly $403M and currently valued around $466M, with new purchases happening daily. With $215M in cash equivalents for flexibility and several methods of funding their purchases, their core strategy focuses on growing their ETH position as a long-term investment while generating yields through staking and on-chain strategies via Electric's protocol. Key People Behind the CompanyPeter Thiel isn’t the only major name backing the company whose investor lineup includes key DeFi players. Beyond just managing yield, Electric Capital also serves as an investor in the DAT, anchoring ETHZilla’s PIPE round with a large initial commitment of capital. Beyond the fund, many familiar DeFi founders are also backing the company, including Constantine from Lido, Robert Leshner from Compound, Sreeram Kannan from EigenLayer, and Mike Silagadze from Ether.fi, among others. Peter Thiel’s Founders Fund also holds 7.5% of the company, having acquired 11.6M shares in the raise. At the company’s helm are the two podcast guests — Executive Chairman Rudisill who oversees treasury and capital market strategy and Electric Capital’s Garg who provides crypto expertise for yield optimization. Together, they’ve established a DeFi Council comprising top Ethereum builders and founders (as seen in their investor list) to maintain ecosystem alignment and be particularly DeFi-centric, which will be discussed later. What Makes It Stand OutBeyond just big names, ETHZilla differentiates itself through several key factors, evident in both its onchain strategy, view of Ethereum as an asset, and investment in DeFi overall. Pioneering ETH Treasury ModelAs the fifth-largest public ETH holder with 102,237 ETH, ETHZilla's onchain strategy goes well beyond standard staking. Through Electric's infrastructure, they tap into liquid restaking tokens, real world assets, and protocol incentives yielding up to 15% returns. While this may seem minimal to those already active onchain, it blows traditional options out of the water. What’s also interesting about ETHZilla is their view of Ethereum as an asset somewhat like Bitcoin: a digital precious metal — portable, divisible, durable, and scarce like silver. But unlike silver's $2-3T market cap, ETH adds programmability and native yields. It's infinitely more practical to store ETH on your phone than haul physical metal around. In the recent episode, RSA, Mac, and Avichal talked about how history shows multiple stores of value can coexist, from U.S. bimetallism in the 1800s to China's silver standard through the 1930s-40s. ETHZilla’s team believes ETH and BTC can similarly coexist, with ETH uniquely positioned as DeFi's primary reserve collateral. Why? As stablecoins (mostly on Ethereum) expand and treasury capital flows onchain, ETH treasuries will beat BTC ones through 2-4% base staking yields plus additional DeFi opportunities that Bitcoin simply can't match. Financial Strategies and GrowthETHZilla's financial playbook brings a series of tools to support their DeFi thesis: - Started with a $425M PIPE raise to grab quick cash for ETH buys.
- Layered in safe 4% convertible notes — low-interest loans from investors that can flip to shares if the stock climbs, all cash-backed to keep things risk-free for existing holders.
- Buy ETH daily via ATM sales, selling new shares when prices are favorable to fund more crypto without dipping into reserves.
- Run a $250 million buyback to repurchase shares when they trade above NAV (the true value of their ETH per share), targeting premiums of 1.7 to 2 times that base.
Together, these create a flywheel: fresh capital buys ETH, which generates DeFi yields to buy even more, compounding growth while feeding the ecosystem. Their onchain deployment strategy through Electric generates compounding returns, achieving double-digit net yields at billion-dollar scale while avoiding overleveraging — all with the goal of becoming a top-3 ETH treasury. The Historical Opportunity of DeFiAs evidenced by their onchain strategy and decision to turn to notable DeFi founders for investment, ETHZilla is banking on a major portion of their “edge” over other DATs as coming from their direct involvement in DeFi. They believe this hands-on approach will position them to weather a potential market shakeout — where weaker players like sub-$1B outfits could get squeezed by high costs eating yields, activist pushes for NAV discount liquidations, or outright consolidations — by actively fueling the ecosystem, funding DeFi liquidity pools, and cycling ETH onchain to reinforce the infrastructure they rely on. Further, the team sees their timing as tapping into a bigger historical wave. To them, DeFi summer in 2020-21 was like the 1999 dot-com frenzy — solid ideas from protocols like Aave, Uniswap, and Lido showed up, but came too soon and over-promised. Fast-forward five years, and they believe we’re hitting that “2005-08 sweet spot” where those concepts finally scale up big, just like Instacart or Uber did. Overall, ETHZilla stands out as one of the most decisively onchain DATs we’ve seen yet. Using the freedom and versatility awarded to ETH treasuries over ETH ETF holders, the company has managed to supercharge their institutional capital with thoughtfully crafted yield strategies, ensuring they’re both supporting, and benefiting from, Ethereum DeFi. With Thiel's backing, Electric's yield expertise, and support from leading DeFi founders, they're setting an outstanding example of institutional capital living actively onchain, rather than just being stored passively. If more follow, we may look back at this breed of DATs as being what catalyzed the next phase of DeFi growth. UR, the world's first money app built fully onchain, transforms Mantle Network into a purpose-built vertical platform — The Blockchain for Banking — that enables financial services onchain. Mantle leads the establishment of Blockchain for Banking as the next frontier. | 
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