Can a Liquidity Provider Experience a Net Loss Even with Trading Fees Earned, Due to Impermanent Loss?

Yes, a liquidity provider can absolutely experience a net loss. Impermanent loss is a loss relative to simply holding the assets, and it can often outweigh the fees earned from trading volume.

If the price divergence is significant and the trading volume (and thus fees) is low, the impermanent loss will exceed the fee income. This is a primary risk for LPs, often referred to as "being farmed" by arbitrageurs.