I have 1 BTC, worth $27,000 today.

I lend that 1 BTC. I'm getting 1% on it. This is better than the pet rock that it otherwise is.

I can then borrow safely 50% of the value of that BTC, so $13,500 worth of goods. Now, I've magically given myself an additional $13,500, that I didn't have before.

The price of BTC would have to drop 50% before I'd be liquidated (some of my BTC would be automatically sold to cove the loan). Certainly, BTC can drop 50% in value... but if you are paying attention, you should have more than enough time to pay back that loan or add more BTC. In practice, BTC drops that much slowly over time (like a month or two), not in one go. It also works the other way, if BTC gains in value, you have less to worry about.

Let's say I pick to borrow ETH ($1800). I can now borrow 7.5 ETH at 3%. I can then lend that 7.5 ETH at 5%. I can then take those 5% earnings and sell those or even restake them.

Money legos. None of this requires permission or credit reports, just transactions on a blockchain. If you use a chain that has far lower fees (like Polygon, Arbitrium, Avalanche), then the fees are a rounding error in the cost of operations.