Regarding the original question, both RxJava and LiveData complement each other really well.
LiveData shines on ViewModel layer, with its tight integration with Android lifecycles and ViewModel. RxJava provides more capabilities in transformations (as mentioned by @Bob Dalgleish).
Currently, we’re using RxJava in data source and repository layers, and it’s transformed into LiveData (using LiveDataReactiveStreams) in ViewModels (before exposing data to activities/fragments) – quite happy with this approach.