The American was beaten by Marcel Kittel (Giant-Shimano) and Peter Sagan (Cannondale) after starting his sprint early, but said he wanted to avoid any trouble in the hectic finish on the edge of the Palm Jumeirah.
"It was a crazy sprint but I just kind of saw my window," he told Cyclingnews in a video interview after pulling on the race leader's blue jersey.
"I wasn't really thinking of going for the sprint. But with one kilometre to go, I was moving up on the left and I knew that it was a sprint you could lead out and go early because it was a tail and cross wind. The trains were rolling but with 500 metres to go I started my sprint to pass everyone. It was a bit early to go and I had to sit down with 50 metres to go and hang on for dear life as Kittel passed me."
"But every time I get to mix it up in a sprint, it's a good learning experience for me. It's something I have in my DNA because my dad was a sprinter, so I always like to play around. It's something I'm working and I hope to build on that."
Phinney was on the front cover all the local media in Dubai after winning the opening time trial stage on Wednesday. He revealed he also received lots of compliments in the peloton and his team protected him well throughout the stage.
"I got a lot of respect from my friends in the peloton and a fair amount of guys were happy for me. That's nice to see and feel from our co-workers," he said.
"The team rode really well and we were all on the front with a big presence, controlling the race really well. I'm proud of the boys and I'm happy to keep the jersey for one more day. Tomorrow is the deciding day and so we'll see how that goes."
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Hopeful for the stage hilly stage to Hatta
The 162km third stage to Hatta includes two late climbs and a dive down to the finish. But Phinney, despite being built for power and time trials, is hopeful he can retain his lead.
"It's not only the climbs, there's potential for more cross winds," he pointed out.
"It's not going to be as windy as it was today. I think there's also smaller roads and the climbs are difficult but we'll see. I believe in my ability to stay with the other guys and power through.
"I owe my team a lot for the work they did today and the work they'll do tomorrow. I don't like to disappoint and so I'm motivated and I'm excited because I think it's going to be an exciting race."