VXLAN Basics

VXLAN – Virtual Extensible Local Area Networks

What is VXLAN?

  • Virtual Extensible LAN (VXLAN) is a network virtualization technology that addresses the scalability problems across data center networks.
  • VXLAN is an L2 overlay over an L3 network. It uses a VLAN-like encapsulation technique to encapsulate MAC-based OSI layer 2 Ethernet frames within layer 3 UDP packets.
  • Each overlay network is known as a VXLAN Segment and identified by a unique 24-bit segment ID called a VXLAN Network Identifier (VNI). 
  • Only virtual machines on the same VNI are allowed to communicate with each other.  Virtual machines are identified uniquely by the combination of their MAC addresses and VNI. 
  • The VXLAN technology is created by Cisco, VMware , Citrix and RedHat.

Why VXLAN is required?

VXLAN technology is developed to address the below problems which are frequently encountered in the Data Center & in the Cloud computing network.

Limitation of 4094 broadcast domains -VLAN

  • Limitations of the no of the VLANs supported in the network. The no of VLAN supported on the traditional network is 4094.
  • Most of the could service providers faces the VLAN short comings since multi companies & multi tenants requires unique VLAN ID & the segmentation of each company resources will lead to utilization of the VLANs. Scalability is an issue.
  • VXLAN address this problem by increasing traditional VLAN limits from 4094 to 16 million.
  • It uses a 24-bit segment identifier to scale beyond the 4096 limitations of VLANs.

Layer 2 extensions across Data Center & Mobility

  • VXLAN address the Layer 2 extensions between different data center sites that must share the same logical networks.


    • Extending Layer 2 domains across Layer 3 network is not possible. This means the same VLAN cannot be extended beyond the Layer 3.
    • VXLAN technology addresses this by binding the two separate layer 2 domains and makes them look like one.
  • VXLAN supports the long distance V-motion & High Availability (HA) across data center.
  • VXLAN also address the problem of scalability by expanding the L2 network across datacenter & maintaining the same network.

Key Benefits

  • It does not depend on STP to converge the topology. Instead Layer 3 routing protocols are used.
  • No links within the fabric are blocked. All links are active and can carry traffic
  • The fabric can load balance traffic across all active links, ensuring no bandwidth is sitting idle.

VXLAN Use Cases – Summary

  • Cloud Service Providers or Data Center which requires more than 4096 VLAN for network segmentation.
  • Stretching Layer 2 domains across the data center in order to accommodate growth without breaking the Layer 2 adjacency requirement for the services & applications.