Peel the shallots. Heat the olive oil in a saucepan over medium-high heat. Add the shallots and fry until lightly colored. Add the balsamic vinegar, brown sugar, and enough water to just cover the shallots. Cover the pot, reduce the heat to medium, and simmer for 15 minutes. Uncover the pot, increase the heat to high, and stir constantly until the sauce becomes thick and syrupy (approximately 5-10 minutes).
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