Looks like they're doing alright. As stated already, you really want the water level about a few centimeters below the netcup so that bubbles from the airstone gently wet the substrate.
Some seedlings can handle wet feet, but peppers tend to enjoy being partially dry. Having them submersed in water can lead to root rot.
Some seedlings can handle wet feet, but peppers tend to enjoy being partially dry. Having them submersed in water can lead to root rot.