A DHCP Server is a network server that automatically provides and assigns IP addresses, default gateways and other network parameters to client devices. It relies on the standard protocol known as Dynamic Host Configuration Protocol or DHCP to respond to broadcast queries by clients.

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A DHCP server automatically sends the required network parameters for clients to properly communicate on the network. Without it, the network administrator has to manually set up every client that joins the network, which can be cumbersome, especially in large networks. DHCP servers usually assign each client with a unique dynamic IP address, which changes when the client’s lease for that IP address has expired.

When to use a router/switch as your DHCP Server
There are many enterprise companies who are still using DHCP for IPv4 on their routers/switches. This is typically done by the network administrator who needs to get a DHCP capability up and running quickly but does not have access to a DHCP server. Most routers/switches have the ability to provide the following DHCP server support:

• a DHCP client and obtain an interface IPv4 address from an upstream DHCP service

• a DHCP relay and forward UDP DHCP messages from clients on a LAN to and from a DHCP server

• a DHCP server whereby the router/switch services DHCP requests directly. However, there are limitations to using a router/switch as a DHCP server

• Running a DHCP server on a router/switch consumes resources on the network device. These DHCP packets are handled in software (not hardware accelerated forwarding). The resources required make this practice not suitable for a network with a large number (> 150) of DHCP clients.