The TerraUSD stablecoin always relied on crypto LUNA for stability, allowing the stablecoin to be replaced with LUNA any time TerraUSD dipped below $1.
The algorithm connecting the coins was broken and when LUNA prices dropped with the rest of the crypto market, the stable coin that needed to remain a dollar collapsed to $0.35. The supply of LUNA started spinning out of control to try and correct the stable coin and I think something like a trillion LUNA were created yesterday to try and stabilize the TerraUSD. As a trillion LUNA were created the LUNA bag holders saw the value of their coins go to zero