In a mixing bowl, combine warm water, sugar, and active dry yeast. Let sit for 5-10 minutes until frothy. Add melted butter and salt. Gradually fold in flour until a soft dough forms. Knead for 5-7 minutes until smooth and elastic.

Place the dough in a greased bowl, cover, and let rise in a warm spot for about 1 hour or until doubled in size.

In a separate bowl, combine cheddar cheese, cream cheese, garlic powder, and onion powder. Season with salt and pepper to taste, stirring until creamy.

Punch down the risen dough and divide into 12 equal pieces. Roll each into a long rope, flatten slightly, fill with cheese mixture, and seal the edges.

In a large pot, boil water and carefully add baking soda. Stir gently. This pretzel bath gives the pretzels their chewy texture.

Boil each pretzel for about 30 seconds on each side, then remove with a slotted spoon to a parchment-lined baking sheet.

Preheat the oven to 425°F (220°C). Brush pretzels with egg wash and sprinkle with sea salt. Bake for 12-15 minutes until golden brown.

Let the pretzels cool on a wire rack for a few minutes before serving warm with dipping sauces.