What actually makes a "stablecoin" stable? Didn't one of them collapse?

Both things are true, because "stablecoin" covers two very different designs that got the same name. The one you remember collapsing (Terra-Luna) wasn't backed by dollars sitting somewhere. It tried to hold its price using code and a sister token — an algorithm promising the peg. When confidence cracked, the algorithm had nothing real underneath it, and it unwound fast. A dollar-backed stablecoin is a different animal: the idea is that for each token issued, an actual dollar (or equivalent) is held in reserve. Its stability rests on trust that the reserve is real and redeemable. The lesson I keep coming back to: what makes money hold value isn't clever code, it's trust. A dollar-backed coin is only as stable as your confidence that the reserves exist. An algorithmic coin asked code to do the job trust does — and code can't. If you only remember one thing: ask what's underneath the peg. If the answer is "an algorithm," be very careful.