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Sorry that Liquify tool in Photoshop shows pixelated images when zoomed in.
Which version of Photoshop are you using and what is your operating system?
Do you see the pixelation only on the specific area of the image where Liquify tool is used?
Would you mind checking the steps mentioned in this discussion https://community.adobe.com/t5/photoshop/images-appear-pixelated-at-certain-zoom-percentages/td-p/86... and let us know if that helps?