# How Lending Incentives Are Distributed
### 💎 Reward Distribution via Merkl
XLend Lending Pools distribute all incentives through [Merkl](https://merkl.xyz/), a DeFi incentive platform that **connects liquidity providers with protocols** seeking to boost activity and engagement.
This distribution method applies to **both Net Deposit Rewards and Supply & Borrow Rewards** across all eligible markets on OP Mainnet and Base.
#### **🔧 How It Works**
* Merkl smart contracts configure and issue incentives.
* User eligibility and reward amounts are calculated by Merkl based on on-chain data (supply, borrow, net deposit).
* Rewards stream continuously and are claimable in real time.
* Merkl defines the **exact logic and parameters for each incentive campaign**.
* XLend displays estimated APRs and claimable rewards by integrating Merkl data, but doesn't directly control distribution.
* Users can claim rewards through either XLend or the [Merkl Claim Portal](https://app.merkl.xyz/users/).
🔗 [View Merkl](https://merkl.xyz/) | [Claim Rewards](https://app.merkl.xyz/users/)
### 🧊 Rewards Are Distributed in exToken Format
Some XLend lending pools distribute rewards in the form of **exTokens** (e.g., `exOptOP`, `exOptUSDC`). These are special recipient tokens that represent your lending position on XLend.
#### **🔧 How It Works**
* Rewards accumulate continuously and are **claimable in real time**.
* When using an exToken-enabled pool, your rewards are issued as **exTokens**, which act as both:
* Your **lending position token**, and
* Your **reward-bearing token**
* You can redeem exTokens **1:1 for the underlying asset** at any time through the XLend interface.
Here’s how it works in practice:
* **Step 1**: Click “Claim” to receive your reward as an exToken (e.g., exOptOP).
* **Step 2**: Go to the **Portfolio** tab to view your supplied position in exTokens.
* **Step 3:** You can choose to **keep this position** to continue earning yield,
or simply click **“Withdraw”** to redeem it for the underlying asset (e.g., OP) and exit the position.
* ### 🟦 OP Rewards Are Distributed in axlOP on Base
On Base, all `OP` rewards are distributed in the form of `axlOP`, a bridged version of `OP` via Axelar.
Unlike OP Mainnet, where some rewards may be distributed as `exOptOP` (claimable on OP Mainnet), rewards on Base **do not use exToken wrappers for** `OP`.
#### **🔧 How It Works**
* Rewards are issued directly as `axlOP` and can be **claimed natively on Base,** no need to switch networks.
* Claimed `axlOP` can be transferred, [bridged](https://app.squidrouter.com/?chains=8453%2C10\&tokens=0x994ac01750047b9d35431a7ae4ed312ee955e030%2C0x4200000000000000000000000000000000000042), or [swapped](https://kyberswap.com/swap/base/0x994ac01750047b9d35431a7ae4ed312ee955e030-to-usdc) like any other token on Base.
* This setup offers a smoother claim experience and reduces the complexity of managing cross-chain reward positions.
**Note: To simplify the claiming process**, other Base pool rewards (such as `EXTRA`) are also distributed **directly on Base** and can be claimed **together**.
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