OTV provides ARP optimization by locally caching ARP entries and responds to ARP requests locally which reduce the number of ARP broadcast packets forwarded across the OTV cloud.

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When a host in Site 1 sends ARP request, OTV edge device forwards the ARP requests across the OTV overlay interface.
When the host on Site 2 sends ARP reply, OTV edge device on Site 1 intercepts this message and store the ARP entry in the local cache called ARP Neighbor-Discovery (ND) cache.
Then the subsequent ARP requests from Site 1 for that host will not be forwarded across the OTV overlay but locally answered by the OTV edge device on behalf of the remote device.
This document uses the example of Host 1 in Site 1 tries to resolve ARP for Host 2 in SIte 2.
Verify the first ARP request handled by the OTV Edge Device
OTV Edge at Site 1 - Forward ARP Requests across OTV Overlay
The below log shows the ARP request received on Ethernet 1/34, OTV edge device does not have ARP entry in the ARP ND cache. Hence it forwards the request across the overlay.
SITE1-OED1# show otv internal event-history arp-nd
ARP-ND events for OTV Process
2011 May 29 07:35:47.005569 otv [8709]: [8757]: Updating arp nd cache entry in P
SS TLVU. Overlay:139 Mac Info: 0102-0026.51ce.0f41
Layer 3 addr: 11.11.102.3
2011 May 29 07:35:47.005561 otv [8709]: [8757]: Caching 11.11.102.3 -> 0102-0026
.51ce.0f41 ARP mapping
2011 May 29 07:35:47.005538 otv [8709]: [8757]: Caching ARP Response from overla
y : Overlay1
2011 May 29 07:35:47.005526 otv [8709]: [8757]: IPv4 ARP Response packet receive
d from source 11.11.102.3 on interface Overlay1
2011 May 29 07:35:47.001361 otv [8709]: [8757]: IPv4 ARP Request packet received
from source 11.11.102.1 on interface Ethernet1/34
OTV Edge at Site 2 - Learning ARP from ARP Requests
When the OTV Edge device at Site 2 receives the ARP request from Site 1, It forwards the request out of the internal interface. Note that it also installs the ARP entry for Host 1 in its local ARP ND Cache. Not only OTV ARP ND Cache, Nexus by default learns ARP from ARP requests.
SITE2-OED1# show otv internal event-history arp-nd
ARP-ND events for OTV Process
2011 May 29 07:34:50.288574 otv [10980]: [10997]: Updating arp nd cache entry in
PSS TLVU. Overlay:264 Mac Info: 0102-0024.986f.bac1
Layer 3 addr: 11.11.102.1
2011 May 29 07:34:50.288551 otv [10980]: [10997]: Caching ARP Request from overl
ay : Overlay1
2011 May 29 07:34:50.288539 otv [10980]: [10997]: IPv4 ARP Request packet receiv
ed from source 11.11.102.1 on interface Overlay1
Verify ARP ND Cache
At the end of ARP resolution for Host2 by Host 1, OTV Edge devices on both site learns and installs the ARP entry for the host on the other site.
SITE1-OED1# show otv arp-nd-cache
OTV ARP/ND L3->L2 Address Mapping Cache
Overlay Interface Overlay1
VLAN MAC Address Layer-3 Address Age Expires In
102 0026.51ce.0f41 11.11.102.3 00:03:12 00:07:50
SITE2-OED1# show otv arp-nd-cache
OTV ARP/ND L3->L2 Address Mapping Cache
Overlay Interface Overlay1
VLAN MAC Address Layer-3 Address Age Expires In
102 0024.986f.bac1 11.11.102.1 00:06:31 00:01:28
Verify subsequent ARP requests handled by OTV Edge Device
OTV Edge at Site 1 - Proxy ARP
When the OTV edge device receives ARP request for Host 2 (11.11.102.3), it verifies the ARP ND Cache.
SITE1-OED1# show otv arp
OTV ARP/ND L3->L2 Address Mapping Cache
Overlay Interface Overlay1
VLAN MAC Address Layer-3 Address Age Expires In
102 0026.51ce.0f41 11.11.102.3 00:00:03 00:07:56
<<< MAC address of Host 2 at Site 2
When the OTV Edge device at Site 1 proxy arps, it verifies the mac address of the Source Host in the ORIB and sends the ARP reply out of the interface stored in the ORIB for Host 1.
SITE1-OED1# show otv route 0024.986f.bac1 vlan 102
<<< MAC Address of Host 1 at Site 1
OTV Unicast MAC Routing Table For Overlay1
VLAN MAC-Address Metric Uptime Owner Next-hop(s)
---- -------------- ------ -------- --------- -----------
102 0024.986f.bac1 1 1d02h site Ethernet1/34
SITE1-OED1# show otv internal event-history arp-nd
ARP-ND events for OTV Process
2011 May 29 07:39:20.046299 otv [8709]: [8757]: Send proxy ARP-Reply to 11.11.10
2.1 (0102-0024.986f.bac1) for target IP 11.11.102.3 with target MAC 0026.51ce.0f
41 on interface Ethernet1/34
2011 May 29 07:39:20.046177 otv [8709]: [8757]: Found ORIB mac route next hop Et
hernet1/34 for target IP 11.11.102.3 with source MAC 0102-0024.986f.bac1
, hence sending ARP proxy here instead of incoming iod Ethernet1/34
2011 May 29 07:39:20.046130 otv [8709]: [8757]: IPv4 ARP Request packet received
from source 11.11.102.1 on interface Ethernet1/34
ARP ND Cache timer
OTV Edge device keeps refresh ARP entry in the ARP ND Cache as long as it sees ARP requests for that hosts in the ARP ND Cache. If there is no ARP request for 10 minutes, the entry expires and the arp entry will be deleted from the ARP ND Cache.
SITE1-OED1# show otv internal event-history arp-nd
ARP-ND events for OTV Process
2011 May 29 07:48:18.835424 otv [8709]: [8747]: Updating arp nd cache entry in P
SS TLVU. Overlay:139 Mac Info: 0102-0026.51ce.0f41
Layer 3 addr: 11.11.102.3
2011 May 29 07:48:18.835416 otv [8709]: [8747]: ARP cache entry deleted 0102-002
6.51ce.0f41 00:09:28 11.11.102.3
2011 May 29 07:46:18.755345 otv [8709]: [8747]: Checking if cache window expired
0102-0026.51ce.0f41 00:07:28 11.11.102.3
Note:
You can clear the OTV internal event hostory logs as below.
SITE1-OED1# clear otv internal event-history all