ETHZilla has introduced a new type of real-world asset investment by launching what it calls the first tradable tokenized aviation instrument on the Ethereum network.
Announced in a Feb 12 press release, the product is designed to give qualified investors exposure to aircraft engine leasing, an industry that has traditionally been limited to private funds and large institutional deals.
The asset named Eurus Aero Token I is issued by ETHZilla Aerospace LLC, which is a fully owned subsidiary formed specifically for this purpose. The token is collateralized by commercial jet engines that are now leased to a major U.S. air carrier.
ETHZilla is a platform that converts physical aviation assets into digital tokens. This gives a secondary market for investors seeking cash flow from collateral.
The company claims that the system is helpful in the modernization of access to cash flow secured by assets through blockchain technology, while the revenue from leasing is linked to physical aviation assets.
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Token Structure Backed by $12.2 Million in Jet Engines
The Eurus Aero Token I is secured by two CFM56 engines, which are normally installed in Boeing 737-800 aircraft. ETHZilla acquired the engines for around $12.2 million and developed a strategy for leasing them until 2028.
The price for one token is $100, and you have to purchase at least 10 tokens. ETHZilla targets an 11% return for investors who hold the tokens for the entire leasing period.
Every month, the leasing revenue from the base rent and usage fees will be gathered and distributed to token holders using the ERC-20 mechanism.
The collateral package includes the engines themselves, the lease payments that are due, the insurance, and the reserve accounts that are connected to the transaction.
ETHZilla also explained that the engines are unlevered at the moment, and the company does not have any plans to introduce debt into this structure in order to maximize profits. The offering can only be done through the Liquidity.io platform.
ETHZilla CEO Highlights Institutional On-Chain Milestone
McAndrew Rudisill, the chairman and CEO of ETHZilla, said that this acquisition is a big step in the direction of getting income-generating assets on the blockchain at a large institutional level.
He cited the example of the lease agreement with one of the largest and most profitable airlines in the U.S. as a clear example of the use of blockchain in established markets.
The maintenance of the engines during the period of the lease will be conducted by the airline, while the post-lease maintenance will be carried out by Aero Engine Solutions.
There is also a put and call option of $3 million in each of the leases that will be used to sell the engines at the end of the lease period. ETHZilla expects that any remaining amount after taxes will be shared proportionally among the token holders.
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