Ambiguity in ratings

I was a 2 star rated user with a rating of 1450 till last night. I just saw the yesterday’s Division 3 rated contest at 11:40 PM IST, and managed to submit 1 problem as well .
even after submitting 1 correct solution, my rating was decreased by 100 , now standing at 1350 with 1 star.

What is this process actually , now i feel its not even trustable.
Please help if someone can.

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There is no ambiguity. We need to maintain our level. As your rating was 2* (DIV 3). You must maintain the level of problem solving else your rating will decrease. As you solved less questions compared to your momentum earlier.

that means the practice questions(not rated) we do also play a part in ratings ?

Rating doesn’t depend on your number of solved problems. It depends on what is your rank compared to all other participants with comparable ratings.
You rating decreased by 100 because, all other 2 stars performed much better than you and had a rank much better rank compared to you.
To understand how the rating mechanism works, see this