IP-over-IP next-hop-based tunneling

Junos OS support an IP-over-IP encapsulation to facilitate IP overlay construction over an IP transport network. An IP network contains edge devices and core devices. To achieve higher scale and reliability among these devices, you need to use an overlay encapsulation to logically isolate the core network from the external network that the edge devices interact with. 

Among other supported encapsulation methods, only IP-over-IP allows transit devices to parse the inner payload and use inner packet fields for hash computation and customer edge devices to route traffic into and out of the tunnel without any throughput reduction. IP-over-IP relies on a next-hop-based infrastructure to support higher scale. 

On supported devices, the routing protocol daemon (rpd) sends the encapsulation header with tunnel composite next hop and the Packet Forwarding Engine finds the tunnel destination address and forwards the packet. The rpd sends the fully resolved next-hop-based tunnel to the Packet Forwarding Engine. 

You can either use static configuration or a BGP protocol configuration to distribute routes and signal dynamic tunnels. You can also configure interface-based firewall filters on any transit or egress device with an action to decapsulate IP-IP packets and forward it to the main instance or to a routing-instance as required.