I asked Wormbobski, one of my neighbors who makes bows and other things about that and here is his reply:
"I’ve used rawhide on some of my bows and to be honest, I try to not subject them to any moisture at all if possible. On the other hand, I know that because I use it for hunting, there is definitely the possibility on my bows becoming wet. I have used both urethane and varnish to protect the rawhide. I’ve also used titebond lll to coat the backs of bows with rawhide. Titebond lll is waterproof, whereas titebond ll was only water resistant. I recently made a rawhide sheath for my large patch knife. I dyed it brown and then melted beeswax over it to seal up the outside. I haven’t let it get wet so I don’t know if it worked as well as the titebond or urethane."
~Kees~