In one embodiment, a device receives a payload encapsulated in an Internet Protocol (IP) transport header having a time-to-live (TTL) value, and decapsulates the payload while maintaining the TTL value. In response to determining that a destination of the payload is not attached to the device, the device may then re-encapsulate the payload in a new IP transport header with a new TTL value that is less than the maintained TTL value, and transmits the re-encapsulated payload toward the destination. In this manner, loops in overlay networks may be prevented based on eventual expiration of the TTL value of the IP transport header, accordingly.