Pseudopotential in VASP I am a beginner in learning VASP (Vienna Ab-initio Simulation Package) and quite interested in the PAW (projector augmented wave) method implemented in VASP. As far as I knew, PAW is an all-electron method, which defines a transformation operator to transform the auxiliary wavefunction to the true wavefunction. For an all-electron method, pseudopotential is not needed. However, in VASP input files, there is a POTCAR, which contains the pseudopotential information. 
So my question is what roles the pseudopotential plays in PAW method?  
 A: I had a similar question in mind a few months ago and asked and got some replies from a few experts.
As far as I can see, your (and my) question is somehow explained in this paper.
I do not use VASP but the DFT code I use implemented PAW method based on this paper. There is one paragraph in the paper ([*] I add myself and I removed the references) that I think explains the issue:

Despite these advantages, the method [PAW] is not yet used very often, and in addition to Blöchl’s own implementation of the method we are aware of only one second program supporting the PAW method. This is partly due to the fact that the PAW approach was introduced a few years after Vanderbilt’s method, but another reason is that—apart from its formal elegance—it was not obvious at the time that the PAW method has significant advantages over other frozen core approaches like the US-PP approach. There are also some aspects in Blöchl’s work that deviate so significantly from conventional pseudopotential methods, that the implementation and testing of the method seems to be fairly difficult. In this work, we will rewrite the PAW total energy functional so that it resembles more closely the usual expressions used in pseudopotential programs and we will establish the exact formal relationship between both the US-PP and the PAW method. Our results show that only very few additional terms must be evaluated
  in order to implement the PAW method in programs supporting US-PP’s.

And also if you look at the equation 9 in the original paper where the PAW method is first described

you see that you need pseudo wave functions (the ones with tilde) to create all-electron PAW wave function. That is why you still need the pseudo potentials.
