> For the complete documentation index, see [llms.txt](https://docs.extrafi.io/extrafi-xlend/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.extrafi.io/extrafi-xlend/xlend-incentives-program/how-lending-incentives-are-distributed.md).

# 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).

<figure><img src="/files/OwVEGnE5J5uWbh5ZsDs5" alt=""><figcaption></figcaption></figure>

* **Step 2**: Go to the **Portfolio** tab to view your supplied position in exTokens.

<figure><img src="/files/zW6LlFQIybq5QmInQIMr" alt=""><figcaption></figcaption></figure>

* **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.

<figure><img src="/files/I4GtyPn71qlkYUXu537E" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/9Uh03cpaa6LWVKrWyBBH" alt=""><figcaption></figcaption></figure>

* ### 🟦 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**.