Hello defigeek,
In theory, lending protocols allow people to re-inject their funds in real economy. By lending ETH, WBTC or any other cryptoasset and borrowing USDT, USDC or any other stablecoin, you can use your savings to build a real-life business without selling them.
Imagine you want to create a pizza restaurant. All you have is ETH, but you don’t want to sell it because you strongly believe in Ethereum. You can deposit your ETH to Aave, borrow dollars and build yur pizza business. When you start making money, you can then repay your loan and take your ETH back. It’s called a Lombard facility, it’s actually a very old financial practice.
Of course, in practice, no one build a restaurant by borrowing on Aave, and most of people use the borrowed coins in DeFi. You can, for example, put some leverage on the collateral you lent (deposit ETH, borrow USDT, swap USDT for more ETH), provide liquidity on a stable pool to get rewards, etc. In theory, you could borrow USD coins to pay for your rent or your studies, but it’s actually rare ^^
I hope my answer will be usefull to you !