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Trying to understand uniswap
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So I've fallen down the crypto rabbit hole again, haven't been back since 2017 but I think I'm here to stay. That said I've been trying to wrap my head around Uniswap. At this point I have 3 main questions:

1) Lets say you provide $1000 USD of liquidity to the ETH-DAI pair. I have a loose understanding of imperative loss but to my knowledge the idea is if the price of eth or dai leave a specific range (either a positive movement or negative movement) you end up losing out on some expected ROI. If I'm wrong please let me know I want to learn more. Ok so lets say the price of eth moves up 20% in the next month. Would I actually lose ROI?

2) OK this has to do with my being confused by this website www.liquidityfolio.com . Expected ROI is the amount you would earn when compared to hodling. But hodling is just holding the coins and not moving them. So heres the question: if I provide $1000 liquidity to the ETH-DAI pair in the form of eth tokens and dai tokens, I leave it in for a year and the price of eth has increased by 50%. I decide to withdraw from the liquidity pool. Wouldn't the amount I would have earned in USD equal to the change in ethereum (so plus 50%) accrued ROI over the 12 months?

Edit: thank you all I understand uniswap way better now. Communities like yours are why crypto will win. I appreciate it 🦄♥️

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3 years ago