The two IPsec encapsulation modes are transport mode and tunnel mode. In transport mode, IPsec protects the upper-layer payload of the original IP packet while retaining the original IP header as the packet’s outer header. It is commonly associated with end-to-end host communication, although it can also protect a GRE packet between tunnel endpoints.
In tunnel mode, IPsec protects the complete original IP packet and adds a new outer IP header containing the addresses of the IPsec peers. This mode is commonly used between security gateways, routers, or site-to-site VPN endpoints because the original source and destination information can be protected within the encrypted inner packet. RFC 4301 formally defines transport and tunnel as the two IPsec security-association modes.
AH and ESP are not encapsulation modes. They are IPsec security protocols. Authentication Header provides integrity and source authentication but not encryption. Encapsulating Security Payload can provide encryption, integrity, authentication, and anti-replay protection. Either protocol can conceptually operate in transport or tunnel mode, although ESP is overwhelmingly used for encrypted enterprise VPN and SD-WAN data channels.
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