Loruna is indeed dying, as some monsters have invaded this empire.
Spoiler warning: Plot and/or ending details follow.
During Shay's Story , soon after meeting with Marek for the third time, Shay is given the ability to leave the Space Weaver's room. In the following room, Shay can begin a conversation with Mom. One of the options during the conversation reveals more about Shay's backstory and purpose on the ship, and how he is apparently on a quest to find a new planet after Loruna was destroyed.
During Vella's Story, after gaining access to the Dead Eye God's room it is revealed the "Dead Eye God" is actually Alex, a man who had crash-landed near Shellmound 300 years ago and cryogenically froze himself until his ship was fixed. During Vella's conversation with Alex, he speaks happily about being able to return to his home planet, Loruna.
It is later revealed by Marek that Loruna is actually a large planet-based empire, not a distant planet. The inhabitants of Loruna are technologically far more advanced than the rest of the planet. The humans living outside of Loruna, beyond the Plague Dam are apparently only aware of Loruna as being some sort of a mystical lost city, similar to real-world Atlantis.