Laplacian of velocity potential

We know that the gradient of a scalar (velocity potential) gives a vector (Direction of the steepest ascent of the velocity).

Also, the divergence of a vector (Velocity vector) gives a scalar (mass flux).

The divergence of gradient of velocity in a finite volume will give the mass flux. The divergence of gradient is called Laplacian.

If the mass flux is conservative then the Laplacian of a velocity is zero, since the mass flow into the finite volume minus the mass flow out of the finite volume must be zero.

$\nabla \space . \space (\nabla U) = (i \dfrac{\partial}{\partial x} + j \dfrac{\partial}{\partial y} + k \dfrac{\partial}{\partial z})\space . \space ((i \dfrac{\partial}{\partial x} + j \dfrac{\partial}{\partial y} + k \dfrac{\partial}{\partial z}) \space U)$

$\qquad= ((i \dfrac{\partial}{\partial x} + j \dfrac{\partial}{\partial y} + k \dfrac{\partial}{\partial z})\space . \space (i \dfrac{\partial}{\partial x} + j \dfrac{\partial}{\partial y} + k \dfrac{\partial}{\partial z})) \space U$

$\qquad = (\dfrac{\partial^2}{\partial x^2} + \dfrac{\partial^2}{\partial y^2} + \dfrac{\partial^2}{\partial z^2})\space U$

$\qquad = \nabla^2 U$

$\nabla^2$ is called the Laplacian operator.

If the mass flux is conservative

$\nabla^2 U = 0$

Please read this page for Gradient and Divergence.