What protocol operates at both Layer 2 and Layer 3 to perform label switching?

Multiprotocol Label Switching (MPLS) is the correct answer because it uniquely operates across both Layer 2 (Data Link Layer) and Layer 3 (Network Layer) of the OSI model.

At Layer 2, MPLS encapsulates packets in a way that allows for efficient forwarding through a network based on short labels rather than long network addresses, which streamlines the process and enhances speed. At Layer 3, MPLS also routes packets based on the content of the Layer 3 headers. This dual-layer capability enables MPLS to efficiently manage data traffic, provide Quality of Service (QoS) features, and facilitate the creation of virtual private networks (VPNs), among other applications.

This unique functionality of MPLS makes it a versatile solution in modern networking environments, which differentiates it from other protocols listed. For example, Ethernet primarily operates at Layer 2, while the Internet Protocol (IP) is focused at Layer 3 and does not handle Layer 2 configurations directly. Frame Relay, although it operates at Layer 2, does not possess the integrated label-switching features that MPLS offers. Therefore, MPLS stands out as the protocol designed specifically for label switching at both layers.