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It's possible to run No Man's Sky with all of the assets unpacked. This makes it easier for modding as you don't have to repack your mods every time you want to test. It may also make loading the game a little faster since everything will already be uncompressed, though I personally haven't seen any noticeable difference.

These instructions assume that you are already familiar with modding in NMS. If you are not, then I suggest you get yourself familiar with the general process of modding in NMS first, before trying to run your game in unpacked mode.

Follow these steps to setup your game to run in unpacked mode:

1) Unpack all the assets (NMS\GAMEDATA\PCBANKS\*.pak) to a new folder (eg, NMS\UNPACKED)

2) Move all the *.pak files and the BankSignatures.bin file from PCBANKS to a backup location. (eg NMS\PCBANKS-BACKUP). You can just delete them if you want but then you will have to reinstall the game to get them back, if you need to restore any of the original assets.

The game will run fine if you do not remove the BankSignatures.bin file but NMS will have another warning when you launch the game. It is critical however, that all the pak files are removed.

3) The NMS\GAMEDATA\PCBANKS\ folder should now only contain:

PCBANKS\Mods\ folder (if you have created it)
PCBANKS\ENABLEMODS.txt (or DISABLEMODS.txt if you have not renamed it)

4) Delete everything in the GAMEDATA folder, EXCEPT the PCBANKS folder. It's all generated files that will be recreated once you run the game. There should be nothing in there but PCBANKS.

5) Move all the unpacked assets from NMS\UNPACKED into NMS\GAMEDATA. It should look like:

NMS\GAMEDATA\AUDIO\
NMS\GAMEDATA\FONTS\
.. etc
NMS\GAMEDATA\PCBANKS\
.. etc
NMS\GAMEDATA\GCAISPACESHIPGLOBALS.GLOBAL.MBIN
.. etc

That's it. You should be good to go. If the game won't start, you've done something wrong. Try restoring your game to run in packed mode and start again. A common problem people have is placing the assets in the PCBANKS folder instead of directly in the GAMEDATA folder. Unpacked asses must be in GAMEDATA, not PCBANKS. See step 5.

You can still put packed mods in the PCBANKS\Mods\ folder.

For testing, unpacked mods should be merged into GAMEDATA.

(keep backups of the originals for your own convenience!)