What Is the Risk for a Concentrated Liquidity Provider If the Price Moves outside Their Chosen Range?

If the asset price moves outside the provider's chosen range, all the provider's capital in the pool is converted entirely into the less valuable of the two assets. At this point, the provider is no longer earning trading fees and is fully exposed to the maximum possible impermanent loss for that price divergence.

To start earning fees again, the provider must actively rebalance their position by withdrawing and redepositing into a new, relevant price range, which incurs gas fees.