What is the purpose of using next-hop-self in BGP?

Using next-hop-self in BGP serves the purpose of changing the next-hop IP to the IP address of the local router. This is particularly useful in specific scenarios, such as when establishing BGP peerings with external (EBGP) neighbors. When an internal BGP (IBGP) router receives a route advertisement from another IBGP peer, the next-hop attribute of that route might point to the IP address of the advertising IBGP router.

When the next-hop-self option is applied, the router updates the next-hop attribute of the advertised route to its own IP address prior to sending it to the EBGP peer. This ensures that the EBGP peer knows it can reach the advertised route directly through the local router, promoting more effective routing without causing confusion about the path to reach the advertised networks.

In scenarios where multiple BGP routers are present, utilizing next-hop-self can establish a consistent routing path, assisting in the simplification of routing policies and improving the overall stability of the network. This mechanism prevents potential issues where an EBGP neighbor might not be able to resolve the original next-hop address, ensuring that the routing table is both accurate and actionable by the receiving router.