There are a number of virtual internet exchanges that BGP peer over VPN links when local presence is not available. Given the IP encapsulation overhead, and the fact that these routes still cross the public internet on the outside of the tunnel, is there a compelling benefit to BGP links over a VPN or GRE tunnel?

I understand how it could be useful for educational and research purposes, so exclude that from your answers. I am specifically asking about production use cases.

Let's assume that multiple physical connections for redundancy are not a consideration for the purposes of IX-over-VPN peering (ie, you're already multihomed). Also assume that bandwidth is not a consideration because we are talking about using existing transit links to carry the IX VPN.

  • Are there benefits to route-latency, hop-counts (eg, smaller detail changes), or non-local route resiliency?
  • Other considerations?
  • 2
    IP overhead is not as significant as you may think, given today's bandwidth and processing power. The main advantage is private peering among your community of interest without worrying about the rest of the Internet.
    – Ron Trunk
    Dec 12, 2023 at 20:55
  • 1
    Aside from route monitors, I don't see much of a point. Peering is about moving traffic, and having only one physical connection defeats the purpose. A tunnel is a tool to deal with the shortcomings of that single provider/connection. Multiple connections are how real networks deal with that problem. (looking at the peers using those exchanges show be all the evidence you need to see they're nothing more than a toy.)
    – Ricky
    Dec 13, 2023 at 1:54
  • @Ricky, good point. I updated the post to that effect since this question was intended to be about neither increasing local physical transit bandwidth nor local redundancy.
    – KJ7LNW
    Dec 13, 2023 at 23:17

1 Answer 1


Virtual peering isn't any more efficient than physical peering (perhaps in overall power consumption if that is a priority).

Its main advantage is that you don't need to be physically present at the peering point, so it might be less expensive and more flexible.

The disadvantages include full dependence on the peer terminating your tunnel, some protocol overhead and most likely an MTU reduction due to that overhead. Also, most routes are likely to increase in length and latency due to your tunnel bypassing the normal routing mechanisms.

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