1. I think that there will be a high performance hit when a physical network is converted to a virtualized. Because it means 'virtual' L2 frames to go packed over real L3 frames, which go over real L2 frames. Well, try to send something larger over something smaller. What happens ? Yes - fragmentation. Also you'll have to send 2xL2 frame headers + 2xL3 Frame headers (total 4) for one 'virtual' L2 frame. What finally will this cause - you to spend a lot more to buy faster cards, high end equipment....
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