Traditionally Layer 3 MPLSVPN service requires two labels; VPNv4 Label and LDP (Transport Label). LDP is used to distribute the transport labels within service provider domain. But let’s see how Layer 3 MPLSVPN service will work in case of Segment Routing. Below is the topology which has configured IGP and MP-iBGP for Service Provider network. CE1 and CE2 are two sites of same customer which are part of same vrf. This service provider core is free from LDP. Segment Routing is used for transport label however MP-iBGP is used for VPNv4 labels. On every SR capable router, Loopback interface is configured as Node segment ID which is also called as Prefix segment ID.Label 200 is Node/Prefix SID of PE2 and is advertised in the IGP protocol as SR label which is part of SRGB. For PE1 reaching CE2; BGP next hop is a PE2 loopback. PE2 loopback is flooded as a label of 200 in the IS-IS sub-TLV extension or OSPF Opaque LSA. PE1 pushes label 200 as transport label and 500 as inner label. PE1 and P1 don’t change the transport label and send the packet to the P2. P2 receives an implicit null label for the loopback of PE2, P2 does PHP (Penultimate Hop Popping), and thus only the VPN label is sent to the PE2.