Your seedlings actually look just fine remember they're doing most of their growing below the surface.
What I like to do is leave at least 2 inches of space between the top of my pot and the top of my Coco. Then once the seedlings come up and grow that couple inches I fill that in with clay pebbles. That has the advantage of keeping my Coco covered so it doesn't dry out and build up salts on the surface it also keeps bugs from getting down in there eating the roots. Then every time you water you end up adding more oxygen into your nutrient mix because it cascades over your pebbles.
The main thing you want to watch out for is you want to really wash those pebbles good because there very alkaline and they can throw your pH off.
What I like to do is leave at least 2 inches of space between the top of my pot and the top of my Coco. Then once the seedlings come up and grow that couple inches I fill that in with clay pebbles. That has the advantage of keeping my Coco covered so it doesn't dry out and build up salts on the surface it also keeps bugs from getting down in there eating the roots. Then every time you water you end up adding more oxygen into your nutrient mix because it cascades over your pebbles.
The main thing you want to watch out for is you want to really wash those pebbles good because there very alkaline and they can throw your pH off.