The products of lubricant degradation are called sludge and varnish. These products start in the dissolved form and accumulate until the lubricant reaches its capacity, referred to as the saturating point, forcing any excess to convert into insoluble degradation products. In certain instances, deposits form on machine surfaces at the exact location where the oil has degraded. In other cases, the oil degrades in one location but, the insoluble degradation products are carried elsewhere by the moving fluid forming deposits on surfaces.

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