The internal interface on the VTEP is configured as a layer-3 port. However, there is no IP assigned to it. It is also important to note that the BD value defined on the VTEP does not have to match the VLAN ID on the device from which you are sending the traffic. However, the dot1q to VNI mapping defined in the encapsulation profile, which is called under the service instance on the internal interface, must match the VLAN ID on the device from which you are sending the traffic. https://www.cisco.com/c/en/us/td/docs/switches/datacenter/nexus7000/sw/vxlan/config/cisco_nex us7000_vxlan_config_guide_8x/configuring-vxlan-flood-and- learn.html#:~:text=and%20Learn%20Configuration-,Example%20of%20VXLAN%20Flood%20an d%20Learn%20Configuration,-The%20following%20example