IaaS (Infrastructure as a Service) providers often need to extend Layer 2 segments across Layer 3 networks to facilitate data center interconnectivity and enable seamless communication between different sites. VXLAN (Virtual Extensible LAN) is the solution that allows for this extension. VXLAN is an encapsulation protocol that creates a Layer 2 overlay network on top of a Layer 3 network using MAC-in-UDP encapsulation. This enables the extension of Layer 2 segments across geographically dispersed data centers and provides the scalability required forlarge-scale cloud environments. It encapsulates Ethernet frames in a UDP packet, which can then be routed through the Layer 3 network.