The limitation of the two previously discussed policies is that a given virtual NIC will always use the same physical network card for all its traffic. IP hash-based load balancing uses the source and destination of the IP address to determine which physical network card to use. Using this algorithm, a VM can communicate through several different physical network cards, based on its destination. This option requires the configuration of the physical switch's ports to EtherChannel. Because the physical switch is configured similarly, this option is the only one that also provides inbound load distribution, where the distribution is not necessarily balanced.

There are some limitations and reasons why this policy is not commonly used. These reasons are described as follows:

• The route based on the IP hash load balancing option involves added complexity and configuration support from upstream switches. Link Aggregation Control Protocol (LACP) or EtherChannel is required for this algorithm to be used. However, this does not apply to a vSphere Standard Switch.
• For IP hash to be an effective algorithm for load balancing, there must be many IP sources and destinations. This is not a common practice for IP storage networks, where a single VMkernel port is used to access a single IP address on a storage device.

So, in a nutshell, due to the added complexity, the upstream dependency on the advanced switch configuration, and the management overhead, this configuration is rarely used in production environments. The main reason is that if you use IP hash, pSwitch must be configured with LACP or EtherChannel. Also, if you use LACP or EtherChannel, the load balancing algorithm must be IP hash. This is because, with LACP, inbound traffic to the VM could come through either of the pNICs, and the vSwitch must be ready to deliver that to the VM and only IP hash will do that (other policies will drop the inbound traffic to this VM that comes in on a pNIC that the VM doesn't use).