Smoke the habanero peppers using fruitwood chips at a low temperature (around 225°F) for 2-3 hours.

In a saucepan, combine smoked peppers, vinegar, onion, garlic, lime juice, sugar, salt, and black pepper.

Bring the mixture to a boil, then reduce heat to low and simmer for 10-15 minutes.

Allow the sauce to cool slightly before transferring to a blender or food processor.

Blend the sauce until smooth, venting the blender to allow steam to escape.

Strain the sauce through a fine-mesh strainer to remove any remaining solids or residues.

Transfer the strained sauce to clean jars or hot sauce bottles and refrigerate.