Does Impermanent Loss Become Permanent upon Withdrawal from the Liquidity Pool?

Yes, the "impermanent" nature of the loss refers to the theoretical possibility of the token prices returning to their initial ratio before the liquidity provider withdraws. However, the loss is realized and becomes permanent the moment the liquidity provider removes their assets from the pool.

At withdrawal, the LP receives the current composition of the pool, which reflects the price divergence and thus the loss relative to simply holding the original assets. The term "impermanent" is only relevant while the assets are still staked.