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How does GRE Encapsulation actually send multicast traffic? My CISCO textbook tells me that the multicast packet is carried inside a unicast packet.

My understanding is:

Multicast packet, say for RIP, has address GRE takes that, wraps it in a unicast packet headed for the host you are tunneling it with; it reaches the recieving-host, is de-capsulated and propagated throughout the recieving-hosts network.

Is that right more or less?

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up vote 1 down vote accepted

That is more or less correct, at least in principle. You do need to configure multicast routing, though.

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