How to Make Damar Varnish

The following recipe from Robert Massey's book "Recipes For Painters" makes a "stock" solution which should be diluted to make a "working" solution prior to use. Common working dilutions would be 1:1, 1:2, 1:3 or 1:4. Where the first number is the stock solution (you are about to make) and the second part is turpentine. Use turpentine or the result will be a cloudy mix which might "bloom" on the canvas. Read: don't use mineral spirits or odorless mineral spirits. Use of D-Limonene (citrus based solvent) can be substituted for turpentine. If you need a modern metric weight-to-volume mix just use 3g of Damar for every 5ml of turpentine or D-Limonene. This make the traditional "5 pound cut" of Damar.
The reasons behind adding resins like Damar, Mastic and Amber, were, in many cases, simply to speed up the drying time of the paint layer. The principle is dissolve a hard resin in a volatile compound like turpentine and the resin will return to its hard resin state once the turpentine has fumed off. Other benefits are that resins can change the consistency of the oil making it more viscous (thicker) which allows more light to refract in glaze layers thereby adding the illusion of depth to that layer.
Using Damar as a final coat, or picture varnish, has been the traditional way to "unify" the finished painting giving a consistent look to different parts of the painting which might vary in gloss. For example, using diluted Damar will allow some colours really to "pop" depending on the style of painting. Also, by dissolving small amounts of beeswax into the Damar a matte look can be achieved if that is what is wanted. The other advantage to finishing with a Damar varnish layer is that it can easily be removed later by the artist or conservators if the painting is showing the signs of light or pollution damage (smoke or dirt).

[From "Formulas For Painters", Robert Massey 1967.]

Varnish No. 1
Purpose: Almost universally used, damar resin -- either Batavia or Singapore -- is sold in pale yellow lumps, and serves many purposes: medium, glaze, final picture varnish.
Ingredients 
1 Part Damar lumps (3 grams)
1 Part Turpentine (5 ml)
Directions For Manufacture: Place the resin lumps and turpentine in a tightly capped bottle, agitating or turning daily until the resin has dissolved, which will take a number of days. Allowing the bottle to stand in warm sunshine accelerates the process. This solution will have a thick, honey consistency. If the damar lumps contain dirt or foreign matter, strain the solution through cheesecloth, or decant it into a clean bottle.
Directions For Use: To use as a final varnish on oil paintings, dilute the solution with an equal quantity of turpentine; for varnishing egg tempera, dilute with four times as much turpentine. The original heavy consistency is ideal for use in emulsifying or for combining with other ingredients to make glazes or painting mediums. This damar solution dries in one hour.