Georginio Wijnaldum and Joel Matip then scored before an own goal from Nelson Semedo rounded off a really disappointing night for Nuno Espirito Santos' men.
Four at the Back was the Wrong Decision
Nuno continued with a back four since its debut against Southampton, in which they drew 1-1.
Initially, the decision to use a back four was to compensate for the loss of Coady, who was absent from the starting 11 due to a coronavirus restrictions.
Given the success with the back four, it made sense for Nuno to continue in that fashion, hoping to cause an upset against the Champions.
However given the attacking quality Liverpool have, reverting back to a back five and looking to counter, could have proved to be a successful game plan.
With a front three of Daniel Podence, Adama Troare and Pedro Neto, the pace that these players display could have really hurt a make shift back four, missing Joe Gomez and Virgil van Dijk through injury.
Especially with the majority of Liverpools attacking threat coming from out wide, having three centre-backs in the box to defend any crosses would have made it difficult for Liverpool to break down.
Matip's goal and Semedo's own goal both came from dangerous balls into the box.
With Liverpool rarely breaking teams down through the middle, playing three midfielders was the wrong call as it only helped combat a small amount of Jurgen Klopp's attacking threat.
A back five would have also helped Semedo, who had an evening to forget.
Since signing in the summer, Semedo has split fans over his defending ability. For Wijnaldum's goal, the Portuguese was well out of position as Liverpool countered to score their second of the night.
On his day, Semedo can be a really bright player going forward, with an abundance of pace and skill.
Therefore, to get the best out of the former Barcelona man, playing him in a back five and giving him more freedom to get forward and threaten at the other end of the pitch may help Nuno's side, who have struggled for goals this season.
It would have also given Andy Robertson a hard time and may have given Wolves an alternative outlet.
Nuno wanted to continue with a back four in order to bolster his sides creativity in a bid to score more goals - something Wolves did brilliantly despite only scoring one goal.
Credit to Wolves, they did create some chances, finishing the match with 10 shots - one shot less than the hosts.
Podence was denied a really clever chip by Liverpool goalkeeper Coaimhin Kelleher, and substitute Rayan Ait Nouri missed a good opportunity to grab a consolation goal at 4-0.
The visitors intermittently threatened throughout the match and perhaps will feel they should have done better, lacking that finishing touch.
Wolves fans will be hoping that Raul Jimenez recovers quickly to put away the chances that are being created.
Whilst a back four can leave Nuno's men looking exposed at the back, there's no doubt that it provides more support in attack, and the efforts from his creative players will be a small positive in what was a really disappointing evening for the Wanderers.