Matip joined Liverpool in the summer transfer window after leaving German club Schalke at the end of the 2015-16 campaign.
The Cameroon international centre-back moved to the Reds on a free transfer and has already become a hit at Anfield.
Former Liverpool defender Carragher has praised the 25-year-old central defender, and believes that he is underrated.
“Matip has been excellent since arriving at Anfield on a free transfer in the summer and he has certainly helped improve a team that has had defensive issue for the past two or three seasons,” Carragher wrote in The Daily Mail.
“Matip, who will not go to next month's Africa Cup of Nations, might be understated and not a player who commands headlines but he knows how to defend,” added the Englishman. “Liverpool need him.”
Liverpool are going strong in the Premier League at the moment and are genuine title contenders, but defensively they still look vulnerable.
The Reds conceded as many as four goals against Bournemouth away from home at the Vitality Stadium in the Premier League last weekend, and that is certainly not good.
Jurgen Klopp’s side will return to action on Sunday evening when they take on West Ham United at Anfield in the Premier League.
The Merseyside outfit are third in the league table at the moment with 30 points from 14 matches, four points behind leaders Arsenal.
Liverpool will head into the match against West Ham as favourites.