What Is the Risk for a Liquidity Provider Whose Chosen Price Range Is Exceeded in a Concentrated Liquidity Pool?

If the price of the asset pair moves outside the liquidity provider's (LP's) chosen range, their capital automatically converts entirely into the less valuable of the two assets. The LP stops earning trading fees and their position is entirely composed of the asset that has relatively decreased in value.

This situation is equivalent to a full "impermanent loss" realization relative to the other asset. The LP must wait for the price to return to their range or manually adjust their position to start earning fees again.