For desired flow and a longer wet-edge time during application (first coat or subsequent coats), you can thin TotalBoat Halcyon marine varnish with clean, fresh water - up to 20%, maximum - but it's not required. Never use any solvent or liquid other than water to thin Halcyon varnish, if needed.
Note that thinning Halcyon will reduce the glossiness of the finish; the more water you add, the less glossy the finish. We recommended you do a small test sample to ensure any thinning of Halcyon achieves the intended results.