350-401 Infrastructure Practice Question
A network engineer is configuring VXLAN on a Cisco Nexus switch. The engineer needs to ensure that the VXLAN tunnel endpoint (VTEP) can forward traffic between hosts in the same VXLAN segment across the Layer 3 underlay. Which two statements are true about VXLAN operation? (Choose two.)
⚠ Common exam trap
The trap here is assuming VXLAN requires multicast or Layer 2 adjacency, when it is designed to operate over Layer 3 with unicast or multicast replication.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
VXLAN encapsulates original Ethernet frames in UDP.
VXLAN uses a 24-bit VNI to identify Layer 2 segments, supporting up to 16 million segments, and encapsulates original Ethernet frames in UDP (port 4789) to extend Layer 2 over a Layer 3 underlay. Multicast is not mandatory, and VTEPs do not require Layer 2 adjacency. The 12-bit identifier is for VLANs, not VXLAN.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
VXLAN tunnel endpoints must be directly connected at Layer 2.
Why it's wrong here
VXLAN tunnel endpoints (VTEPs) communicate over a Layer 3 underlay network. They do not need to be directly connected at Layer 2; in fact, the underlay is typically an IP-routed network. This allows VXLAN to span across data centers and geographic locations. The requirement for Layer 2 adjacency is false.
- ✗
VXLAN requires a multicast underlay for all deployments.
Why it's wrong here
VXLAN can use multicast for BUM (Broadcast, Unknown unicast, Multicast) traffic replication, but it is not mandatory. Modern deployments often use ingress replication or a multicast-enabled underlay. The statement that it requires multicast for all deployments is false. VXLAN can operate with unicast-only underlays using head-end replication.
- ✓
VXLAN encapsulates original Ethernet frames in UDP.
Why this is correct
VXLAN encapsulates original Layer 2 Ethernet frames within UDP packets, typically using UDP port 4789. This allows Layer 2 segments to be extended over a Layer 3 underlay network. The encapsulation includes a VXLAN header with the VNI, and the outer IP header enables routing across the underlay. This is the core mechanism of VXLAN.
- ✗
VXLAN uses a 12-bit identifier to maintain compatibility with VLANs.
Why it's wrong here
VXLAN uses a 24-bit VNI, not a 12-bit identifier. The 12-bit identifier is used in traditional VLANs (802.1Q). VXLAN was designed to overcome the limitations of 12-bit VLAN IDs, so it does not use a 12-bit identifier. This statement is incorrect.
- ✓
VXLAN uses a 24-bit VNI to identify Layer 2 segments.
Why this is correct
VXLAN uses a 24-bit VXLAN Network Identifier (VNI) to identify Layer 2 segments, allowing for up to 16 million unique segments. This overcomes the 12-bit VLAN limitation of 4096 segments. The VNI is carried in the VXLAN header, enabling scalable multi-tenancy. This is a fundamental characteristic of VXLAN.
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Related to this question
Learn chapter
VLANs and Spanning Tree Protocol Concepts
Key term
Fabric Fundamentals
Fabric Fundamentals is the set of core concepts behind a network fabric, where switches and routers form a single logical system that simplifies traffic forwarding and automation.
Key term
VXLAN
VXLAN is a network overlay technology that encapsulates Layer 2 Ethernet frames in UDP packets to extend VLANs across Layer 3 networks.
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Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official Cisco exam blueprint
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