Why Does a Concentrated Liquidity Position Convert Entirely to One Asset When the Price Moves outside the Range?
The pool's AMM formula, within the set range, forces the reserve ratio to match the external price. If the price moves above the upper limit, arbitragers will have bought all of the lower-priced asset (e.g.
Token A) from the pool, leaving the LP with 100% of the higher-priced asset (e.g. Token B).
The opposite occurs if the price drops below the lower limit. This is the point of 100% impermanent loss realization for that price range.
