Overlay networking has been around for more than a decade now, and the ideas behind it are well established.  While both MPLS and VXLAN are overlay technologies, they address different requirements. MPLS is designed to increase packet processing speed while VXLAN aims to allow networks to support more LANs. Let’s explore the two technologies in detail below.

What is MPLS?

MPLS or Multiprotocol Label Switching is a secure and efficient way to ensure high-performance telecommunication networks carry data from one point to another. This technology specializes in streamlining data transmissions between two nodes with short path labels replacing long network addresses. This scalable networking solution is capable of carrying data over a variety of mediums worldwide and is one of the popular business communication solutions.

How Does MPLS Work?

MPLS functions by adding labels on every data packet as they leave the client network. These labels predefine a path that the data packets take over the network. This makes it easy to predict and route traffic on the network. Also, the traffic is divided across different networks to make sure congestion is minimized.

MPLS is capable of adding more sites without undergoing extensive configurations. MPLS is also IP agnostic as it works with your current IP schemes; MPLS simply carries out implementation streamlining of these IPs. MPLS over VPN adds an additional layer of security as MPLS does not have inbuilt security features.

Benefits of MPLS technology

MPLS comes with enough flexibility to allow organizations to scale up as well as customize their solutions. It manages traffic routing efficiently.

MPLS benefits include:

  • Reliability and scalability – As a technology, it has had numerous successful implementations for more than a decade now. It is an extremely reliable and scalable telecommunication technology.
  • Flexible management – The IT and network administration team can optimize and manage the network with ease even if you scale MPLS to multiple sites.

Flexible management

  • Integrate existing networks – It is possible to connect all your existing networks with MPLS, and there is no need to invest in additional hardware for this purpose.
  • Service Level Agreements – Quality of service can be enforced via SLAs, allowing enterprises to increase their network efficiency. It is crucial for ensuring a smooth flow of VoIP services.
  • Redundancy – MPLS ensures the utmost network uptime by providing alternate paths for the traffic as per the predefined guidelines.

Limitations of MPLS technology

MPLS does not give the enterprise full control over the underlying network circuits. The control of the network remains with the ISP or the internet service provider, and you can define the QoS parameters that need to be set as per your requirements. While this may work for smaller businesses that do not want to take on the extra effort of managing the network, most large organizations prefer a more granular level of control than what is offered by MPLS.

The other drawbacks of an MPLS setup include the following:

  • MPLS is not considered very suitable for cloud users as all traffic is routed back and forth to the data center.
  • MPLS also requires WAN implementation for optimizing and streamlining the packet delivery process. This can add to the cost of setup and maintenance.
  • It is difficult to assess your cloud applications or SaaS directly using MPLS.

What is VXLAN?

VXLAN or Virtual Extensible Local Area Network is a relatively newer technology as compared to MPLS. As a network virtualization technology, VXLAN addresses scalability-related problems that are associated with large cloud computing setups and deployments. In other words, this technology is perceived as an effort to create standardization on an overlay encapsulation protocol.

VXLAN is ideal for data center operators where there is a requirement of more than 4000 logical partitions within the network. The second ideal scenario for VXLAN implementation is where the user requires the scalability of Layer two domains.

How Does VXLAN Work?

How Does VXLAN Work?

VXLAN allows Layer 2 traffic to flow on top of the IP fabric. As a VLAN extension technology, VXLAN encapsulates Layer 2 Ethernet frames as an IP. The tunnel that gets created allows users to extend a layer two-segment across layer three networks.

The traffic gets forwarded on the basis of the destination address that is pre-included in the outer IP header. This is the address of destination VTEP or VXLAN Tunnel End Point. These addresses can be conveniently advertised with the help of a BPG setup. On the scalability front, VXLAN is capable of scaling up to 16 million logical networks while allowing for layer two adjacency through IP networks.

Benefits of VXLAN

VXLAN overlays over numerous physical layer two networks. Thus, resource provisioning in cloud environments is not dependent on or restricted to just one layer. The other benefits of VXLAN include the following:

  • Scalability – VXLAN ID is 24 bits and contributes towards increasing scalability in a virtualized cloud environment. With this, you can create up to 16 million isolated networks.
  • Abstraction – The virtual networks are entirely abstracted from and invisible to their underlying physical network. The biggest benefit of this is that there is no need for any additional physical infrastructure. It also reduces the probability of MAC address duplication on any VMs that are present in that particular VXLAN Segment.
  • Ease of migration – VXLAN setup also enables migration between servers of virtual machines. Typically, these servers exist in separate domains as they tunnel the traffic over the Layer 3 network. This is beneficial for allocating resources dynamically between data centers and not limited to the usual Layer 2 boundaries.

Limitations of VXLAN

  • VXLAN requires SDN for configuration as it lacks any actual ‘signaling’ protocols. Also, it works with a single controller making it cumbersome to scale up.
  • VXLAN also requires an underlay network for BUM traffic that is multicast-enabled.
  • A VXLAN setup does not come equipped with any security or confidentiality-related mechanisms for the VLAN packets. Therefore, you are required to invest in additional security methodologies to ensure that your network access is secured and protected from hackers.

Comparing MPLS and VXLAN

Comparing MPLS and VXLAN

MPLS VPN uses layer three on underlay network, while VXLAN can be built on top of any layer of the physical network. Some other differences are given below.


The amount of coupling between the edge as well as core devices is the fundamental point of difference in the MPLS vs. VXLAN discussion. MPLS requires tight coupling between the edge and core devices. However, there is very little state sharing between the edge and the core nodes.

On the other hand, a VXLAN-based VPN solution requires only IP connectivity between the edge devices. These devices are not required to participate in the functioning of the core control plane protocol. Any changes in the transport core do not get signaled to the edge. A control plan protocol is essential for driving data plane behavior.

Hardware support

Both MPLS and VXLAN require specific hardware support to operate at a line rate. However, while VXLAN requires hardware support for encapsulation at the edge of the network, MPLS demands end-to-end support. In VXLAN, network cores do not necessarily need replacing.

Do you want to upgrade your network infrastructure?

MPLS is perceived as a universal network solution, while VXLAN is created to resolve particular problems. MPLS is undoubtedly the more cost-effective option, but it cannot offer cloud access as effectively as VXLAN. MPLS has its place in certain types of networks, but it no longer has a place in the data center. We believe that overlay networking and SD-WAN will easily replace MPLS and provide far more functions, services, and visibility.

Contact us for a free consultation on which network infrastructure solution is best for your enterprise.

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