The black liquid up close
The black liquid was a pathogen manufactured by the Engineers as a biological weapon for war and genocidal purposes.
Capabilities
The black liquid is an extremely lethal pathogen composed of millions of small micro-organisms. Once exposed to another organism, the virus begins mutating its host. The host becomes extremely agressive and seemingly mindless as it attacks any living thing in sight. Geologist Fifield was exposed to the liquid during the USCSS Prometheus' expedition of LV-223, mutating his appearance and causing him to attack his fellow crewmembers. He was also extremely resistant to physical injury, being able to withstand multiple gunshots. It took several shotgun blasts and being scorched with a flamethrower to finally kill him. The liquid also mutated several tiny worms found in the Engineer ship, turning them into the aggressive "Hammerpedes". The Hammerpedes exhibited acidic blood and the ability to regenerate lost body parts, though the latter is an ability commonly found in Earth worms. However, the regeneration of Hammerpedes is much faster than that of normal Earth worms, suggesting that the black liquid can enhance a host's natural abilities.
Holloway was also exposed to the pathogen and began mutating before Meredith Vickers killed him to prevent the virus from coming aboard the Prometheus. The virus appeared to affect his reproductive system. Prior to his physical mutation (while carrying the virus), Holloway had sexual intercourse with his Elizabeth Shaw, impregnating her with the Trilobite. It is not known if his sperm was mutated causing an abnormal conception or if he was simply carrying a Trilobite that moved into Shaw, though the latter seems more probable given that Shaw was sterile. Whether Trilobites prefer to move into female subjects or if Holloway would have naturally given "birth" to the Trilobite is unknown. Although Shaw was exposed to the infected Holloway and had intimate contact with him, she was not infected with the liquid and only received the Trilobite embryo. This suggests that the black liquid itself is not sexually transmitted, although it can affect the host's reproductive systems.The Trilobite carries a lone creature egg for impregnation.
History
It was shown that the Engineers either created or were housing the black liquid thousands of years ago on LV223 for the purpose of unleashing them on their descendents on Earth. Somehow, the Engineers themselves were exposed to the pathogen, wiping out the entire Earth invasion force, except for one still in stasis.
The crew of the ship Prometheus came to explore the planet after finding clues of the Engineers' existence in ancient cave drawings. A few crew members were exposed to the pathogen, and in the ensuing chaos most were killed. The remaining crew later sacrificed themselves and the Prometheus to destroy the Engineer's ship, with only Elizabeth Shaw and the android David leaving with another abandoned ship for the Engineer homeworld.