Pour half of the vinegar over the chiles and add 3 tablespoons of the kosher salt, and mix. Allow to ferment at room temperature uncovered for 4 days.
Grill the yellow peppers until nicely charred. Roughly chop the garlic and shallots.
Place the oil in a medium saucepan and add the charred yellow peppers, fermented scotch bonnets, water, and sugar, and let simmer on low heat until tender.
Add the mixture to a blender and blend until smooth. The consistency should be thicker than most sauces, almost like a glaze. Store in an airtight container in the refrigerator