Company: DEFI
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001999371-25-011381
Chunk: 30

Company: Tidal Commodities Trust I
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 8
Chunk 30
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 to a size where a lack of liquidity in the futures market meant
that the Fund could not sell enough futures contracts to honor redemption requests.

A
market disruption, such as a government taking regulatory or other actions that disrupt the market in bitcoin, can also make it
difficult to liquidate a position. Unexpected market illiquidity may cause major losses to investors at any time or from time
to time. In addition, the Fund does not intend at this time to establish a credit facility, which would provide an additional
source of liquidity, but instead will rely only on the cash and cash equivalents that it holds to meet its liquidity needs. The
anticipated value of the positions in Benchmark Component Futures Contracts that the Sponsor will acquire or enter into for the
Fund increases the risk of illiquidity. Because Benchmark Component Futures Contracts may be illiquid, the Fund’s holdings
may be more difficult to liquidate at favorable prices in periods of illiquid markets and losses may be incurred during the period
in which positions are being liquidated.

Critical
Accounting Policies

The
Trust’s critical accounting policies for the Fund is as follows:

Basis
of Presentation

Preparation
of the financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”)
requires the application of appropriate accounting rules and guidance, as well as the use of estimates, and requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expense and related
disclosure of contingent assets and liabilities during the reporting period of the combined financial statements and accompanying
notes. The Trust’s application of these policies involves judgments and actual results may differ from the estimates used.

Cryptocurrency
Derivative Transactions

The
Sponsor has determined that the valuation of cryptocurrency interests that are not traded on a U.S. or internationally recognized
futures exchange (such as swaps and other over the counter contracts) involves a critical accounting policy. The values which
are used by the Fund for futures contracts will be provided by the broker who will use market prices when available, while over
the counter contracts will be valued based on the present value of estimated future cash flows that would be received from or
paid to a third party in settlement of these derivative contracts prior to their delivery date. Values will be determined on a
daily basis.

Cryptocurrency
futures contracts held by the Fund are recorded on the trade date. All such transactions are recorded on the identified cost basis
and marked to market daily. Unrealized appreciation