foreach ( z going down ) {
    foreach ( y increasing ) {
        foreach ( x increasing ) {

            if ( liquid is in tile ) {
                if ( tile has floor or solid tile is below this tile ) {

                    foreach ( 8 surrounding target tiles ) {
                        if ( no floor present and no solid block present ) {
                            set target tile flag "waterfall" 1;
                            create vector pointing from target tile to current tile;
                            push vector into waterfall vector array on target tile;
                        }
                    }

                }

                if ( tile above has waterfall flag ) {
                    set current tile flag "waterfall" 1;
                    copy waterfall vector array form tile above into current tile;
                }
            }

        }
    }
}