What is the purpose of setting the DN bit in an OSPF LSA

If a Provider Edge (PE) device advertises Type-3, 5, and 7 link-state advertisements (LSAs) to Customer Edge (CE) devices through area 0, the optional high-order bit of these LSAs must be set and called the DN bit. If these LSAs are advertised through an area other than area 0, the DN bit can be set or not set.

The DN bit is used to prevent routing loops. A PE ignores any LSA whose DN bit is set. This prevents a routing loop caused when a PE learns from the CE the LSA generated by another PE in CE dual-homing scenarios.

PE sets the DN-bit of Type 3, 5, and 7 LSAs and checks the DN-bit of Type 3, 5, and 7 LSAs.

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