Impermanent loss is a risk for people who provide assets to a liquidity pool. It happens when the prices of the deposited assets move apart compared with simply holding those assets outside the pool.
Why it happens
Many liquidity pools automatically rebalance asset ratios as traders use the pool. If one asset rises or falls sharply, the liquidity provider may end up with a different mix of assets than expected.
Is it always a loss?
Trading fees and rewards can offset impermanent loss, but they do not guarantee profit. The risk becomes more visible when one token strongly outperforms the other.
The word "impermanent" can be misleading. If the user withdraws while the price difference remains, the loss becomes real.