Nexus 1000v LACP Offloading

You can offload operation of the LACP protocol from the VSM to the VEMs to prevent a situation where the VSM cannot negotiate LACP with the upstream switch when the VEM is disconnected from the VSM (referred to as headless mode). 

VEM management of LACP allows LACP to re-establish port channels after the reboot of a headless VEM. 

For more information, see the Cisco Nexus 1000V Interface Configuration Guide, Release 4.2(1)SV1(4).

• LACP is traditionally a control plane protocol run on the supervisor of a switch (VSM on N1KV). 
• When VSM is down or disconnected the VEM operates in Headless Mode, without the ability of LACP control plane operations.
• LACP can be run on a single link between a VEM and the upstream network.
• LACP Offload solves this problem by offloading all LACP operations to the VEM.
• This makes the data plane more robust and help in FCoE deployments where VSM is behind the VEM.

How to configure and Verify LACP Offload on Nexus 1000v

n1000v# config t
n1000v(config)# lacp offload

Please do a "copy running startup" to ensure the new setting takes effect on next reboot
LACP Offload Status can be verified using "show lacp offload status"
Change in LACP Offload Status takes effect only on the next VSM Reboot
This can potentially cause modules with LACP uplinks to flap

n1000v(config)# copy running-config startup-config
[###############################] 100%

n1000v(config)# reload
!!!WARNING! there is unsaved configuration!!!
This command will reboot the system. (y/n)? [n] y
2010 Sep 3 11:33:35 bl-n1000v %PLATFORM-2-PFM_SYSTEM_RESET: Manual system restart from Command Line Interface

This example shows how to return management of LACP to the VSM and then reload the switch for the change to take effect:

n1000v# config t
n1000v(config)# no lacp offload

Please do a "copy running startup" to ensure the new setting takes effect on next reboot

LACP Offload Status can be verified using "show lacp offload status"
Change in LACP Offload Status takes effect only on the next VSM Reboot
This can potentially cause modules with LACP uplinks to flap

n1000v(config)# copy running-config startup-config
[###############################] 100%

n1000v(config)# reload
!!!WARNING! there is unsaved configuration!!!
This command will reboot the system. (y/n)? [n] y
2010 Sep 3 11:33:35 bl-n1000v %PLATFORM-2-PFM_SYSTEM_RESET: Manual system restart from Command Line Interface

Verify Commands

show lacp offload
Displays the LACP offload status for verification.

show lacp port-channel [interface port-channel channel-number]
Displays information about LACP port channels.

show lacp interface ethernet slot/port
Displays information about specific LACP interfaces.

channel-group auto [mode {on | active | passive}] mac-pinning

Configures port channel mode (active and passive) used by LACP in the port
profile.


Source: Cisco L Commands

Ivan Pepelnjak's article below is a good read and a real world reason to use LACP Offloading: 

Nexus 1000V LACP offload and the dangers of in-band control

 

A nice Cisco Community article on the configuration: Nexus 1000V 1.4 LACP Offload White Paper