New to DeFi: Why does lending income and rate go down with added funds

I am using Ledger Live to Earn by lending, which uses Compound to create the lends. I am unsure of if this is a Ledger Live issue or the way Compound works. I put in X USDT to lend. The rate was 10-12%. two days later I put in another X USDT to lend. the earned income I had already gotten dropped by $10 and the APY rate dropped down to 4.28%

What is the mechanism that causes this?

The interest rates of the Compound protocol are variable. The APY could go up or down after any Ethereum block. The amount of underlying that you have accumulated should never reduce.

You should understand how Compound works and where your APY is coming from. When you and others supply USDT to Compound they go to one big USDT pool. Then borowers could borrow as much as they can/want from that mutual pool. Borrowers pay interest to the pool for borrowing USDT. That’s where your interest is coming from. That interest than distributed between all suppliers in pool proportionate by their share in the pool.

Thus, your APY will fluctuate and change depending how many USDT is borrowed from the pool, as well as depending how many USDT is supplied to the pool as well. Though the average APY will still be somewhat consistent with current market situation. Temporary spikes or deeps in APY will eventualy return to normal.


I defintiely understand that, so I expect variation. What I dont expect is that when I add in a new chunk of money to lend that the rate drops by 2/3s and stays there (been 2 days at this new rate) and that the “earned interest” drops by 10 dollars (Was it earned or not?) I am missing something about how it is working.

Right, I expected variation. What I didnt expect was a drop from 10-12% to 4-5% and remaining at the 4-5% rate for 2 days starting right after I added funds from lending. Is there a graph somewhere I can look at to see if Ledger Live is transmitting correct information?

I also didnt expect that the “interest earned” number would drop from 50-40 dollars the moment I added more funds for lending.

OK, I just restarted Ledger Live and teh APY came back to a normal number. (the interested earned didnt return the $10 though). so maybe this is all a ledger live issue and not a Compound issue. Where else can I lend with compound as easily as I can on ledger live?

There are several community interfaces linked about half way down the page here: