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I am assigning port no: 8 and IP address 192.168.1.207 for nios-ii board
wheras the server machine who is sending high speed UDP packet having port no :9 and IP address: 192.168.1.66 its an Linux Fedora-5 machine.
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I doubt these IP addresses are correct, because manual clearly says, that the IP is settable only using SW0 on the board. If You're changing IP of the TCP/IP stack, then You totally don't understand how this hardware offload works. The packets are not moved to TCP/IP stack if they're offloaded in hardware, so the IP/port checking is done BEFORE the TCP/IP stack. I am not sure if it checks for particular IP, but I am sure it checks for correct port.
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* as i have already mentioned in my previous post: when i send slow UDP packets towards nios-ii based client (by putting smoll delay between consequential packet send) it collect all packet without saying "no free buffer for rx".
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Exactly what I am saying: if You send slow stream, then TCP/IP stack is fast enough to process all the packets. If the stream is fast - it isn't and buffers get filled.