Abstract-We present HALO, the first link-state routing solution with hop-by-hop packet forwarding that minimizes the cost of carrying traffic through packet-switched networks. At each node , for every other node , the algorithm independently and iteratively updates the fraction of traffic destined to that leaves on each of its outgoing links. At each iteration, the updates are calculated based on the shortest path to each destination as determined by the marginal costs of the network's links. The marginal link costs used to find the shortest paths are in turn obtained from link-state updates that are flooded through the network after each iteration. For stationary input traffic, we prove that HALO converges to the routing assignment that minimizes the cost of the network. Furthermore, we observe that our technique is adaptive, automatically converging to the new optimal routing assignment for quasi-static network changes. We also report numerical and experimental evaluations to confirm our theoretical predictions, explore additional aspects of the solution, and outline a proof-of-concept implementation of HALO.Index Terms-IP networks, load balancing, network management, optimal routing.