Which of the following statements about VXLAN encapsulation is TRUE?

VXLAN encapsulates a Layer 2 Ethernet frame within a UDP packet for transport over a Layer 3 IP network. The transport tunnel is established between two VXLAN Tunnel Endpoints (VTEPs) and is identified by the source and destination IP addresses in the outer IP header. The specific Layer 2 broadcast domain, or service, is identified by the 24-bit VXLAN Network Identifier (VNI) located in the VXLAN header. Therefore, the outer IP header identifies the transport tunnel, and the VNI identifies the service tunnel.

A. VXLAN is an IP-based encapsulation and does not use MPLS labels for identifying transport or service tunnels in its base specification.
B. This option incorrectly reverses the roles and introduces MPLS labels, which are not part of the standard VXLAN encapsulation.
D. This option incorrectly reverses the roles of the VNI and the IP header. The VNI identifies the service, not the transport tunnel.

1. Mahalingam, M., et al. (2014). RFC 7348: Virtual eXtensible Local Area Network (VXLAN): A Framework for Overlaying Virtualized Layer 2 Networks over Layer 3 Networks. IETF. Section 1, "Introduction", and Section 5, "VXLAN Encapsulation/Decapsulation". The document states the outer IP header contains VTEP addresses (transport) and the VXLAN header contains the VNI (service segment).

2. Nokia (2021). Nokia 7750 SR and 7450 ESS Service Router Interface Configuration Guide, Release 21.10.R1. Document ID: 3HE 17275 AAAC TQZZA 01. Section: "VXLAN". This guide details that the VTEP source and destination IP addresses define the tunnel, while the VNI identifies the VXLAN instance.