I use water based lacquer for all my cottonwood bark carvings but this finish is horrible for chip carved basswood pieces. Mostly because it doesn't work well with gel stain I apply on most of my chip carvings. I've been using combination of sanding sealer and polyurethane then but after trying few pieces with Danish oil I think I am going to switch.
This is 7.5'' on 7.5'' trivet finished with Danish oil and gel stain:
It takes longer for the finish to dry but it pays off, I find it way easier to work with the gel stain and there are almost no streaks in the wood grain. The following is a picture of 5x5 inches trinket box:
I did this Magic the Gathering card box after practicing with the oil on the projects above. This box is only partially finished with light brown gel stain. The slight contrast is pretty neat:
And finally feeling comfortable enough I used dark mahogany gel stain on this detailed 12'' basswood plate. People who check my blog will recognize the Nietzsche's quote I've carved quite a few times before:
A close-up photo of the center rosette: