Liability is the money that you will need to spend to back or lay your bet, while liquidity is the money that you can use to make a hedge bet from, out of your potential profits. In a quick example: your bet costs $10 at odds +120, this is the liability you need to spend to make your bet. Should the bet win, you will win $22 ($12 in profit). That $12 profit is your liquidity, of which you can spend a portion to make a hedge bet against your original $10 bet. With the right odds and a peer to lay both your bets, you can successfully hedge your bets and ensure a profit regardless of the outcome of a sporting event.