Adding this answer because I felt obligated to correct a few things the other answers say.
Both moves are bad because offensive Swampert is bad.
I wouldn't call offensive Swampert bad. Choice Band Swampert actually has a niche in UU. I asked on Smogon what CB Swampert does over physically offensive Water-types like Gyarados, and this was the response:
CB Swampert has a few things going for it;
- secondary stab that 2HKOes Amoonguss & Slowking / OHKOes (or comes close to it) some other Water resists (Keldeo, some Primarina, Tentacruel) which makes its switchin pool limited and kinda weird
- Ice Punch lets it nuke Salamence which is pretty notable among physical Water types
- Ground typing lets it block Volt Switch and means it's not scared out by some things other Water breakers would be forced to switch by (Raikou, Rotom-H for instance)
- flip turn hits pretty hard
the tier just doesn't have a whole lot of water types that can go physical so pert is unique in that sense, it's just generally very prediction heavy and the reward often isn't great if you run into something like a rotom or tangrowth. fun af to use if you really wanna try it though
Source
As for whether Liquidation or Waterfall is better, Liquidation is better, but not because of the Defense drop. Liquidation is used since it has more power than Waterfall, albeit by a 5 BP difference. Liquidation is mainly for the 2HKO on Hippowdon. Also, Swampert's Analysis Page lists Liquidation as the powerful Water STAB for a Choice Band Swampert set.
TL;DR Liquidation is better on Choice Band Swampert as it has more power, is used mainly to 2HKO Hippowdon, and offensive Swampert has a niche over physically offensive Water-types like Gyarados due to its Ground typing and being able to pivot with Flip Turn.