It should compact down quite a bit, hard to say exactly how much but I wouldn't be surprised if it ended up slightly less than half of its present size.
When you do extracts a bunch of the break material has already been settled. What you are seeing is mostly cold break and it likely will compact done to about 1/2 inch layer with the yeast on top when the ferment is over. Nothing to worry about. That break is a little bit of protein suspended in a lot of wort so it looks much bigger than it really is.
Of course while it ferments it will be a swirling mass of mess. It will settle out though. What you are seeing is not really strange and is in no way a problem.