1) Preheat oven to 375 degrees F. Seed and mince chili, chop shallot, and peel and chop shrimp. It doesn’t really matter what size of shrimp you use since you want to chop them up anyway.
2) In a oven-safe cast iron skillet, melt butter over medium heat. Add shallot and chili and cook for a minute or two until they start to soften. Add shrimp and cook until shrimp are just cooked through, maybe 2-3 minutes.
3) Remove skillet from heat and stir in sour cream, cream cheese, lemon, most of the cheddar cheese, and seasoning. The residual heat should help mix together ingredients. Stir together well. Top with a little extra cheddar and a pinch of salt and pepper.
4) Bake dip at 375 degrees F. for about 30 minutes until the dip is bubbling hot in the center and getting browned and crispy around the edges. Remove and let cool for a minute.
5) Top dip with chopped chives and serve with chips. Serve while warm.
Dip is best served right away. If you have leftovers and want to reheat them, do so in an 325 degree oven until the dip is warm. Don’t microwave.