Share variables between verilog file and niosII application file(.c file)

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Is the above template applicable even while using On-chip memory? OR

Is it that on-chip memory can be handled in much simpler way and directly using hdl and niosII?

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The above template DOES apply to onchip memory.

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One more question where are the variables stored that are declared in hdl. (integer, reg). can't this variable's memory location be accessed using niosII.

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That's exactly the purpose of the MM slave. It maps the hdl registers to Nios address space