Method to distribute public IPs throughout a SP network?

Let's say you are a small service provider. You are peered with a larger service provider that gives you a /26 of public IP. You might not even be using BGP with them, just a default route to their network.

What is a method that you could use to distribute those public IPs to customers throughout your network? Of course you could split that up into smaller /30's and use one per customer, but that wastes many of the IPs.

Could you use something like VXLAN to create virtual L2 network, with the default gateway the router peered with the larger service provider? Is this something that is commonly done, or are there other methods used?