So varnish is formed by oxidation byproducts that overcome the solubility of the oil and due to thermal degradation from system hot spots caused by sparking.

Varnish starts as a sticky soft residue sticking to the metal and so preventing the anti-wear additives in the oil from attaching, thereby increasing wear of the component. Debris get stuck in the sticky varnish, causing the wear.

Varnish usually makes its presence known with poor response from hydraulic valves and by the need to replace filters more often because they are clogging up more frequently and this due to sludge and building up of varnish. All of this causes a reaction in the hydraulic system that results in erroneous operation, increased wear on hydraulic valves, pumps and motors, a shorter lifespan of the hydraulic oil due to higher level of oxidation, less efficient operation and increased downtime. Erratic operation of hydraulic actuators is regularly one of the first signs of varnish build-up. The cylinder will appear to be stuck sometimes, but it is the valve spool in the body that cannot operate freely.