Put the grated cucumber in a paper towel or dish towel, squeeze out the excess water until mostly dry. Set aside.
Blend all ingredients, except the cucumber and dill, in a high-speed blender and puree until smooth.
Add cucumber and pulse until well incorporated.
Add dill, pulse until finely chopped.
Refrigerate to thicken. The longer you leave it, the thicker it gets.
Recipe makes about 2 1/2 cups sauce.If you are not using a high speed blender you can either soak the cashews overnight or grind them into a fine powder using a coffee grinder. You can also boil them for 30 minutes.UPDATE: After much trial and error, I have updated this recipe to my favorite version using cashews instead of tofu. If you are nut free and want the tofu version, take out cashews and water and use 1 1/2 cups silken tofu instead. The original recipe also did not have lemon juice, which I use to cut the sweetness of the cashews, so take out the lemon juice as well if you prefer.