We investigated the damage mechanism of MoN/SiN multilayer XUV optics under two extreme conditions: thermal annealing and irradiation with single shot intense XUV pulses from the free-electron laser facility in Hamburg - FLASH. The damage was studied "post-mortem" by means of X-ray diffraction, interference-polarizing optical microscopy, atomic force microscopy, and scanning transmission electron microscopy. Although the timescale of the damage processes and the damage threshold temperatures were different (in the case of annealing it was the dissociation temperature of Mo2N and in the case of XUV irradiation it was the melting temperature of MoN) the main damage mechanism is very similar: molecular dissociation and the formation of N2, leading to bubbles inside the multilayer structure.