Sakalya said: 'Whosoever knows that person whose dwelling is water, whose sight is the heart, whose mind is light,—the principle of every self, he indeed is a teacher, O Yagnavalkya.' Yagnavalkya replied: 'I know that person, the principle of every self, of whom thou speakest. The person in the water, "he is he." But tell me, Sakalya, who is his devata?' Sakalya replied: 'Varuna.'

In plain words: Sakalya asks about the being whose home is water. Yagnavalkya says it is the person in the water. Sakalya says its deity is Varuna, the god of the waters.