Layer 3 VPNs

In a Layer 3 VPN, routing occurs on the service provider's routers. As a result, Layer 3 VPNs require information about customer routes and a more extensive VRF policy configuration to share and filter routes that originate or terminate in the VPN.

Because Layer 3 VPNs require the provider routers to route and forward VPN traffic at the entry and exit points of the transit network, the routes must be advertised and filtered throughout the provider network.

Route advertisements originate at the CE routers and are shared with the inbound PE routers through standard IP routing protocols, typically BGP. Based on the source address, the PE router filters route advertisements and imports them into the appropriate VRF table.

The PE router then exports the route in IBGP sessions to the other provider routers. Route export is governed by any routing policy that has been applied to the particular VRF table. To propagate the routes through the provider network, the PE router must also convert the route to VPN format, which includes the route distinguisher.

When the outbound PE router receives the route, it strips off the route distinguisher and advertises the route to the connected CE router, typically through standard BGP IPv4 route advertisements.

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