How Lending Incentives Are Distributed

💎 Reward Distribution via Merkl

XLend Lending Pools distribute all incentives through Merkl, 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.

🔗 View Merkl | Claim Rewards

🧊 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, or swapped 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.