In a medium saucepan, bring the water or chicken broth to a boil. Gradually whisk in the grits and add a pinch of salt. Reduce the heat to low, cover, and let it simmer, stirring occasionally until thickened (about 15-20 minutes). Add the shredded cheddar cheese in the last few minutes, stirring until melted and creamy.
While the grits are cooking, heat olive oil and butter in a large skillet over medium-high heat. Add the diced onion and cook for about 2-3 minutes until it starts to soften.
Add the diced red and green bell peppers and continue cooking for an additional 3-4 minutes until they are tender.
Stir in the minced garlic and cook for 1 minute until fragrant.
Add the shrimp to the skillet and sprinkle with Cajun seasoning and smoked paprika. Cook for about 3-4 minutes, or until the shrimp are opaque and cooked through, stirring occasionally. Season with salt and pepper to taste.
Serve the creamy grits onto plates, topped with the Cajun shrimp mixture. Garnish with chopped green onions for a fresh touch.