So far the biggest criticisms I've read have been about centralization. But honestly, I do not understand why this would be bad. The idea of the project is simply to provide liquidity to large players
There's a certain legitimacy to that argument, but you could equally argue that Liquid is only making an oligopoly (the exchanges) more centralised, which could in the long term break any illusions that the exchanges are as independent as they would like clients to believe.
and thereby help make the price the right one.
If there's a real marketplace for BTC, there's no such thing as a "correct price". Only controlled (i.e. rigged) marketplaces can claim that prices are "correct".
This could even decrease the volatility that occurs in some exchanges with lower volume. The most interesting thing is that by charging a Fee, the project will have to prove much better than the current arbitrage solutions.
The other interesting idea is that you can issue tokens backed by something other than BTC. Exchanges could use that to manage fiat liquidity, and so create a stablecoin in the process. If all the exchanges depended on such a stablecoin for liquidity, the stablecoin itself would be less exposed to 1 exchange going bust (that would still rock the peg seriously, but it need not definitively kill the coin, as would happen to USDT if Bitfinex did actually go bankrupt).
Even better: if that hypothetical stablecoin could be used without using the exchanges themselves, decentralised platforms could use it too. The ultimate would be if atomic swaps between such a stable coin and BTC could happen, then individuals could trade the stablecoin with BTC freely and quickly, and the exchanges could provide the price stability for the stablecoin. In that scenario, you could actually see an improvement in the decentralisation of cryptocurrency exchange; why hold BTC with a 3rd party if you don't need to? The centralised exchanges would end up trading only the stablecoin as a result (probably why this won't happen, but things are heading in that direction one way or another anyway)
