In one embodiment, a method is performed at a first node. The method may include receiving, at a first node, a request from a source host associated with a network to communicate with a destination host. The first node may determine whether the destination host is associated with the network. If the destination host is not associated with the network, the first node may determine an instance identifier (IID) and a proxy egress tunnel router (PETR) locator address used to communicate with the destination host. The first node may send an indicator to an ingress tunnel router (ITR) to encapsulate a packet with the IID and the PETR locator address before sending the packet from the source host to the destination host.