Circuitless IP (CLIP) is a virtual (or loopback) interface that is not associated with a physical port. You can use the CLIP interface to provide uninterrupted connectivity to your device as long as a path exists to reach the device.
For example, as shown in the following figure, a physical point-to-point link exists between R1 and R2 along with the associated addresses (195.39.1.1/30 and 195.39.1.2/30). Use an interior Border Gateway Protocol (iBGP) session between two additional addresses, 195.39.128.1/30 (CLIP 1) and 195.39.281.2/30 (CLIP 2).
CLIP 1 and CLIP 2 represent the virtual CLIP addresses that you configure between R1 and R2. These virtual interfaces are not associated with the physical link or hardware interface, which permits the BGP session to continue as long as a path exists between R1 and R2. An IGP (such as OSPF) routes addresses that correspond to the CLIP addresses. After the routers learn all the CLIP addresses in the AS, the system establishes iBGP and exchanges routes.
The system advertises loopback routes to other routers in the domain either as external routes using the route-redistribution process, or after you enable OSPF in passive mode to advertise an OSPF internal route.
You can also use CLIP for PIM-SM, typically, as a Rendezvous Point (RP), or as a source IP address for sending SNMP traps and Syslog messages.
The system treats the CLIP interface as an IP interface. The network associated with the CLIP is treated as a local network attached to the device. This route always exists and the circuit is always up because there is no physical attachment.