So if you put money in the pool, and the values of the 2 assets in relation to eachother changes a lot you will end up with more of the one that dropped in price and less of the one that went up in price in a way where you have less than what you started off with. That is the reason why there are these incentives to provide liquidity in the SPS rewards and the fees generated also help a bit.
Ideally the 2 assets remain relatively equal in value, worst case is that something goes down a lot which hits you with impermanent loss and later down the line goes way up in price again which hits you again with impermanent loss.
At least that is how I understand and have experienced it back when I provided liquidity for a low cap altcoin and Ethereum as a test, ever since I stayed away from providing liquidity trying to make some passive income from it.
From what I have read, more then half of the liquidity providers are actually losing money. https://www.nasdaq.com/articles/half-of-uniswap-liquidity-providers-are-losing-money
Not sure how it is with the Splinterlands liquidity pools but Voucher prices going up and down a lot likely is not good for those providing liquidity.
Thank you for the explanation. I understand it a little better, but no fully yet. That's probably an indication that I shouldn't be in liquidity pools. Usually, if I don't fully understand an investment strategy it has poor results.
If it's not a lot of money, I would say see it as a test and a learning experience. For all I know it will give a good return with limited danger of impermanent loss.
Regerdelss what you end up doing, good luck!