An epoxy dome is applied to a custom pin to produce depth, thickness and a smooth surface finish.  Each of these attributes improves the perceived quality of the pin.  However, the ultimate purpose of an epoxy dome is to protect the printed portion of the custom pin.  

There are two types of pins, enamel pins and printed pins.  Epoxy domes are used almost 100 percent of the time on printed pins.  The reason being, printed pins are more susceptible to scratches and therefore need the protection.  In addition, printed pins have no depth so epoxy domes enhance the pin by giving it depth and thickness. There are design details that require choosing a printed pin.  If your design has really small details, has gradient or shaded colors, or you have a large volume of pins to produce very quickly printed pins are the only option.

The negative to epoxy is it yellows over time.  Something in the chemical makeup begins changing.  You won’t notice it immediately but after a year if you were to compare an older epoxy dome pin to a newer epoxy dome pin you would see a distinct yellowing.  This is one of the reasons epoxy has become less and less common.

Epoxy dome pins can hold up under water.  But should they be put in water for long stretches or stored wet, no. The epoxy is not the problem when it comes to water, it is the metal that will damage.  If the base metal of your epoxy pin were iron, eventually it would rush.  But as for the epoxy it will holdup in water and protect the print.  A little rain won’t hurt a pin, but being constantly wet might.