Place the cheese curds in the freezer for at least 30 minutes before breading. This is an essential step as it prevents the cheese from melting too quickly and oozing out of the coating during cooking.
Set up a breading station with three shallow bowls. Place the flour in the first bowl. In the second bowl, whisk together the eggs and milk. In the third bowl, combine the panko breadcrumbs, garlic powder, smoked paprika, and salt.
Working in small batches, dredge each cheese curd in flour, shaking off the excess. Dip it into the egg wash, then roll it in the seasoned panko, pressing gently to make sure the crumbs adhere on all sides.
For an extra crispy coating, dip each breaded curd back into the egg and roll through the panko a second time.
Place the breaded cheese curds on a plate and freeze them for another 10 minutes while you preheat the air fryer to 400°F.
Spray the air fryer basket with cooking spray. Arrange the cheese curds in a single layer with space between each one. Spray the tops with cooking spray.
Air fry for 5 to 6 minutes, shaking the basket gently halfway through, until the coating is deep golden brown and crispy. The cheese inside should be warm and gooey but not completely melted out.
Let the cheese curds cool for 1 to 2 minutes before eating as the cheese inside will be very hot. Serve with marinara sauce and ranch dressing for dipping.