In a large mixing bowl, combine warm water, granulated sugar, and active dry yeast. Let sit for 5 to 10 minutes until frothy. Then, incorporate melted butter and salt. Gradually mix in flour until a dough forms, then knead for 5 to 7 minutes until smooth. Transfer to a greased bowl, cover, and let rise for 1 hour until doubled.

In a separate bowl, combine cheddar cheese, softened cream cheese, garlic powder, onion powder, and a pinch of salt. Mix until creamy and set aside while the dough rises.

Once dough has risen, punch it down and divide into 12 pieces. Roll each into an 18-inch rope, flatten slightly, and place 1 tablespoon of cheese filling in the center. Fold the dough over the filling and seal. Roll to ensure the cheese is enclosed.

In a pot, bring water to a boil and stir in baking soda. Reduce heat to maintain a gentle boil. Use a slotted spoon for easy removal of pretzels.

Preheat oven to 425°F (220°C). Boil each pretzel for 30 seconds on each side, then remove and drain. Place on a parchment-lined baking sheet.

Brush with beaten egg and sprinkle with coarse salt. Bake for 12 to 15 minutes until golden brown. Cool slightly before serving.