Company: DEFI
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001999371-25-006264
Chunk: 32

Company: Tidal Commodities Trust I
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 32
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 models, depending
on whether significant inputs are observable or unobservable, are categorized in Levels 2 or 3 of the fair value hierarchy.

Brokerage
Commissions

The
Fund recognizes brokerage commissions on a full trade basis.

Derivative
Counterparty Margin

Margin
is the minimum amount of funds that must be deposited by a cryptocurrency interest trader with the trader’s broker to initiate
and maintain an open position in futures contracts. A margin deposit acts to assure the trader’s performance of the futures
contracts purchased or sold. Futures contracts are customarily bought and sold on initial margin that represents a small percentage
of the aggregate purchase or sales price of the contract. Because of such low margin requirements, price fluctuations occurring
in the futures markets may create profits and losses that, in relation to the amount invested, are greater than customary in other
forms of investment or speculation. As discussed below, adverse price changes in the futures contract may result in margin requirements
that greatly exceed the initial margin. In addition, the amount of margin required in connection with a particular futures contract
may be modified from time to time by the exchange during the term of the contract. Brokerage firms, such as the Fund’s clearing
brokers, carrying accounts for traders in commodity or cryptocurrency interest contracts generally require higher amounts of margin
as a matter of policy to further protect themselves. Over the counter trading generally involves the extension of credit between
counterparties, so the counterparties may agree to require the posting of collateral by one or both parties to address credit
exposure.

When
a trader purchases an option, there is no margin requirement; however, the option premium must be paid in full. When a trader
sells an option, on the other hand, he or she is required to deposit margin in an amount determined by the margin requirements
established for the underlying interest and, in addition, an amount substantially equal to the current premium for the option.
The margin requirements imposed on the selling of options, although adjusted to reflect the probability that out of the money
options will not be exercised, can in fact be higher than those imposed in dealing in the futures markets directly. Complicated
margin requirements apply to spreads and conversions, which are complex trading strategies in which a trader acquires a mixture
of options positions and positions in the underlying interest.

Ongoing
or “maintenance” margin requirements are computed each day by a trader’s clearing broker. When the market value
of a particular open futures contract changes to a point where the margin on