Assume 1E is 1000 USDC, we LP 1E and 1000 USDC. The total balance of tokens in the pool is 10E and 10,000 USDC. If the value of ETH doubles to 2000 USDC, the value of the pool stays the same (20,000 USDC) but the token balance changes due to arbitrageurs. It becomes 6E and 12,000 USDC.

Our LP share is 10% of the pool. If we withdraw here we get back 10% of the pool, which is 0.6E (1200 USD) + 1200 USDC = 2400 USDC. We made 400 USD by LPing, but we could've made more by simply holding the initial assets - we would have 1E (2000 USD) + 1000 USDC = 3000 USD.