Peter Thiel's Founders Fund recently liquidated its entire stake in ETHZilla, a move that has sparked widespread attention in the crypto space. ETHZilla was once regarded as a pioneering project in the Ethereum corporate treasury model, attempting to indirectly hold a large amount of ETH through the company's balance sheet, providing investors with a leveraged way to participate in Ethereum's growth. However, this aggressive strategy ultimately collapsed due to market volatility and debt pressure, exposing the systemic risks of such models.
ETHZilla was formerly the biotechnology company 180 Life Sciences. In July 2025, the company suddenly transformed, raising approximately $425 million and officially changing its name to ETHZilla, launching its Ethereum treasury strategy. Two months later, it refinanced another $350 million through convertible bonds, rapidly accumulating over 100,000 ETH (estimated at around $300 million to $350 million based on mid-2025 prices). Its core logic was to treat ETH as "digital equity," generating additional returns through staking and DeFi News protocols, thereby enhancing shareholder returns.
Unlike the "buy and hold" strategy common with Bitcoin treasuries, ETHZilla's model was more complex, requiring active management of staking nodes and participation in liquidity pools, making it highly sensitive to technology and market fluctuations. It sought to become an indirect tool for public investment in Ethereum, allowing investors to gain exposure by purchasing its stock without directly holding ETH.
However, this structure also harbored hidden dangers: the company's financial health was highly dependent on ETH price movements and debt levels. By the end of 2025, the crypto market entered a correction phase, and ETH prices fell significantly. To repay debts, ETHZilla was forced to sell 24,291 ETH in December (worth approximately $74.5 million at the time), reducing its holdings to approximately 69,800 ETH. This forced sale not only undermined market confidence but also revealed a fatal feedback loop: price decline → increased debt pressure → forced sale of ETH → further price pressure → continued asset devaluation.
Shortly after this sale, a filing with the U.S. Securities and Exchange Commission (SEC) revealed that Peter Thiel's fund had reduced its stake in ETHZilla to zero. Although the filing did not specify the reason for the exit, the close timing undoubtedly suggests a warning about the deterioration of the project's fundamentals. This leveraged "ETH treasury experiment" ultimately became a cautionary tale in crypto finance.
This event not only prompts the market to re-examine the risks of corporate-level crypto asset allocation but also triggers a deep reflection on the feasibility of "Ethereum as a corporate reserve asset." When financial engineering is combined with market volatility, even seemingly sound strategies can collapse in an instant.