Preheat your oven to 350°F (175°C). Grease a 2-quart baking dish.
In a large pot, bring water to a boil. Add the sliced squash and chopped onion, and cook for about 5 minutes until tender. Drain well and let cool slightly.
In a large mixing bowl, combine the cooked squash and onion with the cheddar cheese, 1 cup of crushed saltine crackers, milk, eggs, melted butter, salt, black pepper, garlic powder, onion powder, and cayenne pepper. Mix until well combined.
Pour the mixture into the prepared baking dish. Sprinkle the remaining crushed saltine crackers evenly over the top.
Bake in the preheated oven for 30-35 minutes, or until the casserole is set and the top is golden brown.
Remove from the oven and let cool for about 5 minutes before serving.