The key component of liquid armor is a shear thickening fluid. STF is composed of hard particles suspended in a liquid. The liquid, polyethylene glycol, is non-toxic, and can withstand a wide range of temperatures. Hard, nano-particles of silica are the other components of STF. This combination of flowable and hard components results in a material with unusual properties.
"During normal handling, the STF is very deformable and flows like a liquid. However, once a bullet or frag hits the vest, it transitions to a rigid material, which prevents the projectile from penetrating the Soldier's body," said Dr. Eric Wetzel, a mechanical engineer from the Weapons and Materials Research Directorate who heads the project team.
In other words, they've invented Military Grade OOBLECK :-)