In a VXLAN environment, the VTEP (VXLAN Tunnel Endpoint) is responsible for maintaining Layer 2 isolation between segments. The VTEP encapsulates Layer 2 frames within Layer 3 packets (using MAC-in-UDP encapsulation) and uses a 24-bit VXLAN Network Identifier (VNID) to identify and maintain isolation between different Layer 2 segments over a shared Layer 3 infrastructure123. References := RFC 7348, Cisco Press resources on VXLAN