For a L3 VPN using Native MPLS, MPLS encapsulation must be enabled on all routers on the Label Switched Path (LSP) between Label Edge Routers (LER). When MPLS encapsulation is enabled, an MPLS label stack follows the Ethernet header and contains an outer label path to the egress VPN router and an inner label identifying the VPN. The outer label egress VPN router path is assigned to the MPLS router by the Label Distribution Protocol (LDP) and is used by the receiving Label Switch Router (LSR) to determine the next hop on the LSP. The LSR removes the MPLS label from the header and replaces it with a new label before the packet is forwarded to the next LSR in the LSP.
You enable MPLS encapsulation in the global configuration mode of the global VRF.
Use the mpls ip command to enable IPv4 MPLS encapsulation in global configuration mode.
In interface configuration mode, the mpls ip command enables MPLS encapsulation for both IPv4 and IPv6 on the interface.
Use the mpls ipv6 command, specifying the IPv6 transport address, to enable IPv6 MPLS encapsulation in global configuration mode.
You can specify next hops that should be excluded from MPLS when entering these commands by specifying the IP address for the next hop to be excluded.