Lacquer is made from nitrocellulose, which comes from cellulose in cotton and wood, or from CAB-acrylic. It dries very quickly, so it is usually applied with a spray gun. It is fairly protective and durable, but its drying speed is its main advantage. Lacquer dries before dust has a chance to settle.
Lacquer can also be used as a toner (a transparent stain) by mixing it with stain and lacquer thinner. It also cures hard so that it can be rubbed with abrasives to an even sheen.
The drawback to using lacquer is that the thinner required for spraying is toxic and highly flammable. It must be used with adequate ventilation. Lacquer can be brushed on, too. To make a brushing lacquer, manufacturers dissolve it in a slow-evaporating thinner, which provides the time necessary to brush the mixture on a surface. But you still need to work quickly.
Lacquer dries so fast that it is best sprayed. You can apply multiple coats in one day.
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