The Reds could reportedly keep Melgarejo around long-term at a price in the £7 million range next summer if he shows promise at Anfield.
A 22-year-old left-back, Melgarejo is every bit as comfortable and perhaps more dangerous playing as a winger. Nonetheless, he's expected to compete with and challenge Jose Enrique at the left-back spot in Liverpool's lineup in 2013-14.
After having made a handful of club appearances in his native Paraguay, Melgarejo joined Benfica in 2011, and was loaned out to Pacos de Ferreira immediately.
Playing on the left wing, he showed off his athleticism, quickness and goal-scoring prowess, netting 10 goals in 29 league games for Pacos to lead the squad that year.
It remains to be seen how Liverpool's Brendan Rodgers will utilize Melgarejo next season, but it's difficult to imagine the Reds boss playing him as a traditional left-back considering some of his many struggles at the back last season with Benfica.
Melgarejo's speed, skill and overall potential on the attack make him a valuable player for Liverpool.
As Whalley points out, the Reds must apply for a work permit in order to finalize the signing. Melgarejo has only been capped once for Paraguay's senior national team, and laws in the U.K. rule that a player outside of the European Union must have played in at least 75 percent of his national squad's games over the past two years in order to automatically qualify for a work permit.