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I need an idea for cloud computing graduation project. I was thinking about security and encryption , but most of the ideas are more suitable for a research rather than an application, so I am thinking of making a cloud-based embedded system. What kind of embedded systems can benefit from cloud computing?

It depends. If the embedded system is not real-time constrained, then any such can use cloud resources for database, heavy duty application processing, etc. If they are real-time constrained, then the question is whether that is "soft" or "hard" real-time. Hard real-time is not a suitable situation to use cloud resources as communications and other latencies are unknowable, hence distinctly not real-time. Soft real-time depends upon a worst-case latency factor, and must have alternate computing/database resources if the cloud resources are unavailable due to network, cloud provider, or other issues.

One important part of your graduation project is coming up with an idea that's well researched and with proper arguments for its validity.
If you can't come up with arguments yourself, and/or can find no data to back up your claims, that's usually a good indication that your idea isn't a good one.