Pseudopotentials and the Projector Augmented Wave (PAW) method are techniques for simplifying DFT calculations by replacing the deep core electrons with an effective potential.
Core electrons (1s, 2s, 2p for heavy elements) are tightly bound and do not participate in chemical bonding. Including them explicitly requires very fine numerical grids and many basis functions, making calculations prohibitively expensive.
A pseudopotential replaces the true all-electron potential near the nucleus with a smoother effective potential that:
The Projector Augmented Wave (PAW) method, used by VASP and other codes, is a more rigorous formalism that:
Different pseudopotential libraries can give slightly different property values. This is one reason why the same material may have different computed properties in different databases.