Cisco routers running Cisco IOS XE software include DHCP server and relay agent software. The Cisco IOS XE DHCP server is a full DHCP server implementation that assigns and manages IP addresses from specified address pools within the router to DHCP clients. These address pools can also be configured to supply additional information to the requesting client such as the IP address of the DNS server, the default router, and other configuration parameters. If the Cisco IOS XE DHCP server cannot satisfy a DHCP request from its own database, it can forward the request to one or more secondary DHCP servers defined by the network administrator.

DHCP supports three mechanisms for IP address allocation:

• Automatic allocation--DHCP assigns a permanent IP address to a client.
• Dynamic allocation--DHCP assigns an IP address to a client for a limited period of time, which is called a lease (or until the client explicitly relinquishes the address). DHCP also supports on-demand address pools (ODAPs), which is a feature in which pools of IP addresses can be dynamically increased or reduced in size depending on the address utilization level. ODAPs support address assignment for customers using private addresses.
• Manual allocation--The network administrator assigns an IP address to a client and DHCP is used simply to convey the assigned address to the client.

The format of DHCP messages is based on the format of BOOTP messages, which ensures support for BOOTP relay agent functionality and interoperability between BOOTP clients and DHCP servers. BOOTP relay agents eliminate the need for deploying a DHCP server on each physical network segment. BOOTP is explained in RFC 951, Bootstrap Protocol (BOOTP) , and RFC 1542, Clarifications and Extensions for the Bootstrap Protocol .

The main advantage of DHCP compared to BOOTP is that DHCP does not require that the DHCP server be configured with all MAC addresses of all clients. DHCP defines a process by which the DHCP server knows the IP subnet in which the DHCP client resides, and it can assign an IP address from a pool of valid IP addresses in that subnet. Most of the other information that DHCP might supply, such as the default router IP address, is the same for all hosts in the subnet so DHCP servers can usually configure information per subnet rather than per host. This functionality reduces network administration tasks compared to BOOTP.

The Cisco IOS XE DHCP implementation offers the following benefits:

• Reduced Internet access costs

Using automatic IP address assignment at each remote site substantially reduces Internet access costs. Static IP addresses are considerably more expensive to purchase than are automatically allocated IP addresses.

• Reduced client configuration tasks and costs

Because DHCP is easy to configure, it minimizes operational overhead and costs associated with device configuration tasks and eases deployment by nontechnical users.

• Centralized management

Because the DHCP server maintains configurations for several subnets, an administrator only needs to update a single, central server when configuration parameters change.

DHCP provides a framework for passing configuration information dynamically to hosts on a TCP/IP network. A DHCP client is an Internet host using DHCP to obtain configuration parameters such as an IP address.

A DHCP relay agent is any host that forwards DHCP packets between clients and servers. Relay agents are used to forward requests and replies between clients and servers when they are not on the same physical subnet. Relay agent forwarding is distinct from the normal forwarding of an IP router, where IP datagrams are switched between networks somewhat transparently. By contrast, relay agents receive DHCP messages and then generate a new DHCP message to send on another interface.

The figure below shows the basic steps that occur when a DHCP client requests an IP address from a DHCP server. The client, Host A, sends a DHCPDISCOVER broadcast message to locate a DHCP server. A relay agent forwards the packets between the DHCP client and server. A DHCP server offers configuration parameters (such as an IP address, a MAC address, a domain name, and a lease for the IP address) to the client in a DHCPOFFER unicast message.

Figure 1

DHCP Request for an IP Address from a DHCP Server

A DHCP client may receive offers from multiple DHCP servers and can accept any one of the offers; however, the client usually accepts the first offer it receives. Additionally, the offer from the DHCP server is not a guarantee that the IP address will be allocated to the client; however, the server usually reserves the address until the client has had a chance to formally request the address.

The client returns a formal request for the offered IP address to the DHCP server in a DHCPREQUEST broadcast message. The DHCP server confirms that the IP address has been allocated to the client by returning a DHCPACK unicast message to the client.

The formal request for the offered IP address (the DHCPREQUEST message) that is sent by the client is broadcast so that all other DHCP servers that received the DHCPDISCOVER broadcast message from the client can reclaim the IP addresses that they offered to the client.

If the configuration parameters sent to the client in the DHCPOFFER unicast message by the DHCP server are invalid (a misconfiguration error exists), the client returns a DHCPDECLINE broadcast message to the DHCP server.

The DHCP server will send to the client a DHCPNAK denial broadcast message, which means the offered configuration parameters have not been assigned, if an error has occurred during the negotiation of the parameters or the client has been slow in responding to the DHCPOFFER message (the DHCP server assigned the parameters to another client) of the DHCP server.

DHCP address pools are stored in non-volatile RAM (NVRAM). There is no limit on the number of address pools. An address binding is the mapping between the client's IP and hardware addresses. The client's IP address can be configured by the administrator (manual address allocation) or assigned from a pool by the DHCP server.

Manual bindings are stored in NVRAM. Manual bindings are just special address pools configured by a network administrator. There is no limit on the number of manual bindings.

Automatic bindings are IP addresses that have been automatically mapped to the MAC addresses of hosts that are found in the DHCP database. Automatic bindings are stored on a remote host called the database agent. A DHCP database agent is any host--for example, an FTP, TFTP, or RCP server--that stores the DHCP bindings database.The bindings are saved as text records for easy maintenance.

You can configure multiple DHCP database agents and you can configure the interval between database updates and transfers for each agent.

The DHCP server database is organized as a tree. The root of the tree is the address pool for natural networks, branches are subnetwork address pools, and leaves are manual bindings to clients. Subnetworks inherit network parameters and clients inherit subnetwork parameters. Therefore, common parameters, for example the domain name, should be configured at the highest (network or subnetwork) level of the tree.

Inherited parameters can be overridden. For example, if a parameter is defined in both the natural network and a subnetwork, the definition of the subnetwork is used.

Address leases are not inherited. If a lease is not specified for an IP address, by default, the DHCP server assigns a one-day lease for the address.

Configuration parameters and other control information are carried in tagged data items that are stored in the options field of the DHCP message. Options provide a method of appending additional information. Vendors that want to provide additional information to their client not designed into the protocol can use options.

The Cisco IOS XE DHCP implementation also allows most DHCP server options to be customized. For example, the TFTP server, which stores the Cisco IOS XE image, can be customized with option 150 to support intelligent IP phones.

Virtual Private Networks (VPNs) allow the possibility that two pools in separate networks can have the same address space, with private network addresses, served by the same DHCP server. Cisco IOS XE software supports VPN-related options and suboptions such as the relay agent information option and VPN identification suboption. A relay agent can recognize these VPN-related options and suboptions and forward the client-originated DHCP packets to a DHCP server. The DHCP server can use this information to assign IP addresses and other parameters, distinguished by a VPN identifier, to help select the VPN to which the client belongs.

For more information on DHCP options and suboptions, see the "DHCP Options Reference" appendix in the Network Registrar User's Guide , Release 6.3.

During lease negotiation, the DHCP server sends the options shown in the table below to the client.

The Cisco IOS XE DHCP server on-demand address pool (ODAP) manager is used to centralize the management of large pools of addresses and simplify the configuration of large networks. ODAP provides a central management point for the allocation and assignment of IP addresses. When a Cisco IOS XE router is configured as an ODAP manager, pools of IP addresses are dynamically increased or reduced in size depending on the address utilization level.

ODAPs support address assignment using DHCP for customers using private addresses. Each ODAP is configured and associated with a particular Multiprotocol Label Switching (MPLS) VPN. Cisco IOS XE software also provides ODAP support for non-MPLS VPN address pools by adding pool name support to the peer default ip address dhcp-pool pool namecommand.

DHCP server subnet allocation is a way of offering entire subnets (ranges of addresses) to relay agents so that remote access devices can provision IP addresses to DHCP clients. This functionality can occur along with or instead of managing individual client addresses. Subnet allocation can improve IP address provisioning, aggregation, characterization, and distribution by relying on the DHCP infrastructure to dynamically manage subnets.

This capability allows the DHCP server to be configured with a pool of subnets for lease to ODAP clients. Subnet pools can be configured for global ODAP clients or MPLS VPN ODAP clients on a per-client basis. The DHCP subnet allocation server creates bindings for the subnet leases and stores these leases in the DHCP database.