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Combine the lentils and 3 1/2 cups water in a large saucepan and bring to a boil over high heat. Reduce the heat to medium-low and simmer, uncovered, until the lentils are just barely tender but still hold their shape, about 20–22 minutes. Do not drain — the lentils should have absorbed most of the water, with just a thin layer of liquid remaining at the bottom.
While the lentils cook, heat 2 tbsp of the olive oil in a large skillet over medium heat. Add the sliced onions and the sugar and cook, stirring occasionally, until the onions are deeply golden-brown and jammy throughout, 35–40 minutes. Reduce the heat to medium-low if the edges begin to darken too quickly. Set aside about one-third of the caramelized onions to use as a topping.
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