Rinse urad daal thoroughly with water 2 to 3 times. Soak it in water for 5 to 6 hours or overnight.
Drain all the water from the soaked lentils. Add the lentils to a blender jar along with green chili and ginger and blend into a smooth paste using water. The consistency should be similar to thick cake batter. To test, drop a small amount of batter into water; it should float.
Add salt and lightly beat the batter with a hand mixer to aerate it. This step will ensure the vadas are light and fluffy
Heat the Paniyaram pan on medium-low heat. Add a few drops of oil in each round section and carefully add 1 to 2 tablespoons of batter into each one. Cover the pan with a lid. Let it cook for 4 to 5 minutes on low heat until the Vada are lightly golden on the bottom. Then slowly flip them over using a chopstick or spoon and cook the other side for another 3 to 4 minutes. (See notes for Deep Frying option)
Take the vadas out of the pan and let them cool for 10 minutes.
Add 4 cups of warm water to a large bowl. Add the vada to the water and let them soak for 10 minutes.
In another bowl whisk yogurt, water, salt, and sugar to a smooth, pourable consistency.
Remove the vadas from the water one at a time and gently squeeze out all the water by pressing them between your palms. Line them up in a large serving bowl.
Repeat the process of cooking, soaking, and squeezing the water from the vadas with the remaining batter.
Pour the prepared yogurt over the vadas and gently stir so that the vadas are fully submerged in the yogurt.
Refrigerate until you're ready to serve. While you can serve them at room temperature, they taste best chilled, so make sure to refrigerate for at least 2 to 3 hours.