  We present a combined theoretical and experimental study of the electronic
structure and equation of state (EOS) of crystalline PdN2. The compound forms
above 58 GPa in the pyrite structure and is metastable down to 11 GPa. We show
that the EOS cannot be accurately described within either the local density or
generalized gradient approximations. The Heyd-Scuseria-Ernzerhof
exchange-correlation functional (HSE06), however, provides very good agreement
with experimental data. We explain the strong pressure dependence of the Raman
intensities in terms of a similar dependence of the calculated band gap, which
closes just below 11 GPa. At this pressure, the HSE06 functional predicts a
first-order isostructural transition accompanied by a pronounced elastic
instability of the longitudinal-acoustic branches that provides the mechanism
for the experimentally observed decomposition. Using an extensive Wannier
function analysis, we show that the structural transformation is driven by a
phase transition of the electronic structure, which is manifested by a
discontinuous change in the hybridization between Pd-d and N-p electrons as
well as a conversion from single to triple bonded nitrogen dimers. We argue for
the possible existence of a critical point for the isostructural transition, at
which massive fluctuations in both the electronic as well as the structural
degrees of freedom are expected.
