Fees are not profit

Fees earned is a gross number. It tells you what the pool paid you. It does not tell you whether you are better off than if you had done nothing at all.

Three things stand between fees and profit: the value of the two tokens changed while you held them in a pool rather than in your wallet, you paid gas, and if you zapped in you paid an entry swap. Only after all three is a number allowed to be called net.

A liquidity position continuously rebalances. As one token rises against the other, the pool sells you out of the winner and into the loser. Come back later and you hold more of whichever token performed worse.

The gap between what the position is worth and what simply holding the same two tokens would have been worth is the divergence loss. It is commonly called impermanent loss, which is a misleading name: it becomes permanent the moment you exit.

The figures below are invented for illustration. They are not a real position, not a backtest, and not a forecast. They exist to show the shape of the arithmetic.

Divergence is not always negative. A range-bound pair that trades heavily can pay more in fees than it loses to rebalancing, and a position can beat holding by a wide margin. The point is not that liquidity provision loses money; it is that the fee number alone cannot tell you which case you are in.